Bad Credit Home Equity Loans
- Kirk Haverkamp - MortgageLoan.com
Lenders aren't generally considered Santa Claus; but if you have bad credit, finding a mortgage can seem like a gift from the North Pole. In today's market, however, loans for people with bad credit are available, even though their rates tend to be higher than conventional loans. Despite the elevated costs, you can still find a good home equity loan if you follow the tips below:
Four tips for home equity loans
- Shop around. Competition is a good thing for the consumer, and when it comes to home equity loans, there's plenty to choose from. And with more competition comes cheaper prices. Research lenders on the Internet and get quotes on rates and closing costs. Before making a commitment, check with the Better Business Bureau to make sure a lender doesn't have any complaints lodged against it.
- Understand the loan. The market is loaded with lenders who will try to pull a fast one on a person with poor credit and a lack of knowledge of the mortgage marketplace. Make sure that this isn't an impulse purchase. It's important to understand the specifics of your mortgage, and how loans differ. For example, an adjustable-rate mortgage will give you a low monthly rate for an initial period of three to seven years; but then the rate adjusts upward. On the other hand, a balloon mortgage will have the same initial, low payment period; but when it concludes, the entire mortgage will be due in full.
- Scrutinize closing costs. Each mortgage lender is required, by law, to provide you with a Good Faith Estimate detailing these costs. Make sure that you understand all the charges, and keep a watchful eye out for bloated origination fees.
- Get a loan you can afford. Most lenders will be happy to give you as much money as you want. They don't mind if you have to start making enormous monthly payments on the loan. Make sure the loan benefits you in the long run. Will it help you get your finances back in shape, and eventually qualify you for a better loan? That should be the ultimate goal of any financial transaction.
When it comes to home equity loans for people with poor credit, there is a Santa Claus. But if this is your situation, the biggest gift you can give yourself is to be a smart shopper and follow the tips above. In the end, you'll get a loan that will help, not hurt, your financial situation. That may become the best Christmas present you get this year.
Latest from our Contributors
Browse Mortgage Rates
Browse our comprehensive guides to popular topics related to mortgage and personal finance.