So college is done and a new job is on the horizon but there are student loans to pay off and your home needs a major overhaul. The wedding put a major dent in your savings and with the baby already on the way it is going to be impossible to meet all these financial needs and expenses. The easiest thing to do is to take out a home equity loan. To put in the simplest terms possible, you take a loan using your home as a collateral. But remember that if you have a poor credit history it makes it difficult to get a home equity loan and this then becomes a bad credit home loan, which is more stringent and expensive.
Tips and Advice on Home Equity Loan
We already know that even though getting a home equity loan is simple, its still not that easy. There are a lot of aspects that go into getting home equity loan and if you have poor credit it gets difficult and longer to get the loan. Here is some advice on how to get a bad credit home loan:
- You may need the money now and you may need the money urgently, but if you do not know what you are getting yourself into while taking out a home equity loan, you could be in more trouble than you started with. Quite simply put, you are using your home as collateral to get a loan, if you do not pay your installments on time or if you do manage to become a defaulter, you could very well lose your home. The lending institution that has given you a loan will take over the collateral – your home – in lieu of the payments due to them. Be smart and be sure.
- If you have decided that you want a home equity loan, you need to start taking steps to repair your poor credit history. You can start by paying off outstanding bills; this will really pay off in the long run especially if you are the sort who needs credit.
- Do you have bad credit? Be prepared to face higher interest rates and hesitant lenders. Do not be put off, find out as much as you can about different lenders and their rate of interest before making the final decision.
- If you have narrowed down to two lending institutions, then you need to compare the two critically. Check whose rate of interest is higher and also check for policies and terms of conditions. Go in for a lender that suits your needs.
- If you are not getting credit anywhere, you need to consider the Internet as an option as well. There are thousands of sub-prime lender websites that will give you quotations for free on the Internet.
- Understand what fees you are going to be paying as no lending institution is going to give you a loan for free and just basic interest rates. There is the closing cost, which is the rate of closing a successful home equity loan deal. There are other fees like the lawyer fees, application fees, credit reports, title search fees, notary fees, insurance fees, property appraisal fees, loan documentation fees included in the mix which can add up to quite a bit of money. It can easily rate up to 5% of the entire amount of the loan. Do not fall prey to lenders who do not advertise these closing costs. Always be aware of ‘hidden’ costs.
- If there is no closing cost, remember that the lending institution is not running a charitable institute. They have most certainly included it in your interest rate. Be aware of these things and then take a home equity loan rate.
- Another tip about home equity loan rate is the points on closing. This is nothing but a service fee, which is charged on the closing of the deal.
At the end of it all no matter how much advice on home equity loan rates you get or how many tips on home equity loan rates you acquire, the home equity loan can either make you or break you. Understand which side of the fence you stand and then let that tip you over.
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