Is it possible to get a home equity loan or 2nd mortgage with a poor credit score. The one thing we have going for us is that our house is completely paid off. We have no credit cards and our vehicles are also paid off. The only debt we have are some medical bills that we are making payments on which is around $2500. My wife and I are both employed and make decent income of around $6000 monthly. We just have some things coming up to where we would like a loan for around $15,000. I think our credit score is around 590
. (We ran in to some difficulty when I lost my job and had a baby born with a disability and medical bills piled up). But with that much equity and such a low score would there be a loan company that would work with us? Would our local bank be able to help or should I check around on the net that specialize in bad credit loans? Any recommendations?Thanks!
Thank you all so much for such great answers and some great explanations! Our original loan for our house was over 10 years ago so I don’t remember much about how all of that loan stuff works. We have never checked in to a equity loan so I know nothing about them except for some research on the net. I think I’ll start with my local bank and go from there. Thank you all!
Danity……I have no idea what you meant by your answer!
One more quick note. I was not working for quite some time due to a back injury that ended in surgery. I have now been back to work for a little over a year now though. My wife has been a teacher for 12 years. So, we had a 2 year span to where our credit went down the drain but the last year have been on time with what little debts we do have. I was also thinking it would be difficult to raise our credit score without having any credit out there. Maybe starting with a credit card and just using it for small purchases and paying off the balance each month would be one way. I was also thinking with the equity loan would really help rebuild our credit with timely payments. My son needs some extensive dental work and that is why we are wanting a equity loan to pay for that and other services he needs due to his disability.
Nathaniel
Ana
IS IT? WHY ARE YOU ASKING ME? ASK YOURSELF? ASK SOME ONE ELSE? THEN ASK YOURSELF AGIAN? AND THEN ASK ME AGAIN? AND THEN ASK YOURSELF AGIAN? AND THEN ASK ME ? AND THEN ITS YOUR TURN TO ASK YOUR SELF?
well i hope it helps
Comment by danity.kanes_02 — March 8, 2010 @ 8:28 am
Ricardo
I’m not in the Real Estate/Banking world but I do own a house and rea ding your situation I do feel that you will get approved for a 2nd mortgage. Your debt to income is low according to the information that you gave so this should show some creditablity on your behalf and get your approved. With the low credit score – the interest rate may be a little higher. Best of luck
Comment by Pretty Boy 25 — March 11, 2010 @ 1:09 pm
Mathew
if your house is completely paid off, you dont need a 2nd mortgage. You need a house equity loan.
Chacnes are that you will get such loan, although with your poor credit score, because your house will be used as a collateral and if you wont pay your loan on time, the bank may sell your house to pay off that debt. You should check with your bank first to discuss your situation and tell them how you wil pay the loan off over time.
Comment by T E — March 13, 2010 @ 5:46 pm
Joyce
Well, it wouldn’t be a 2nd mortgage if there’s no 1st mortgage. Generally a credit score that low would knock you out of consideration, but if your house is paid off, is in an area where there aren’t too many houses the banks already own through foreclosures, and your recent credit history is decent, you might have a chance.
Comment by Judy — March 16, 2010 @ 10:54 pm
Tommy
Difficult to get a home equity line or a 2nd these days. You can
just get a loan against the house – like a cash-out refinance.
If your score is low, the rates maybe slightly higher.
Comment by bobby — March 17, 2010 @ 12:46 am
Ronald
Yes, it is POSSIBLE – but it may not be EASY.
What banks are looking for in current economic times are borrowers with a strong credit history who can demonstrate that they are in a strong position to pay their loans.
The value of your collateral, while very important, is still only one piece of the puzzle. Lending (especially on a large scale) is largely a game of calculated risk. Even though you have a valuable home, you will not get a mortgage if the risk of default is too great.
Remember to put yourself in the shoes of the bank – you’re asking to borrow a significant amount of money and your recent life events may suggest you would have difficulty making your payments on time. Even though your property is valuable, if the unthinkable were to happen (a foreclosure), it will still take several thousand dollars for the bank to repossess the home. Not to mention, the bank wouldn’t gain possession of the home for about 6 to 9 months after the litigation and the redemption period are complete. Then tack on possibly several more months to actually sell the home. In the meantime, they’re getting no income from the property and will have to pay taxes and the utility bills.
Nevertheless, I don’t think you should be counted out. If you are serious about getting a Home Equity loan or a mortgage, your plan should be to convince the bank that this is a temporary bump in the road. You need to SHOW them HARD EVIDENCE that your finances are improving or will improve and that you’ve got a long term strategy to get this situation turned around.
Even loan officers are persons who understand that unfortunate things can happen, but you can’t walk away from an appointment and leave them with the impression that you’re going to continue “business as usual” with the status quo.
Good luck! I hope you find something suitable.
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Comment by Choice — March 20, 2010 @ 12:02 am
Jesse
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Comment by Nancy T — March 22, 2010 @ 11:35 pm
Lorraine
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Comment by Greenfin — March 26, 2010 @ 10:01 am