Home equity loans have many useful purposes. On average, homeowners
select these loans as a way to reduce and eliminate their credit card
debts. This is a wise tactic considering that home equity loans have lower
rates than most credit cards. Homeowners also have the option of
choosing an equity loan with fixed rates and terms. Even though home equity
loans are easier to qualify for than most loans, lenders consider
several factors before approving a loan.Understanding Home Equity LoansIf applying for a home equity loan, homeowners must assess their
personal finances beforehand. Home equity loans are very popular. Because of
low rates, they present the perfect opportunity for becoming debt free
or financing a home improvement project. Furthermore, those looking to
start a new business may use their home’s equity as seed money.These loans are secured by your home’s equity. Thus, mortgage lenders
are more apt to approve a loan request. With this said, getting an
equity loan with a low credit score is feasible. In this situation, choosing
the right lender is very important.Mortgage lenders have different lending guidelines. If you have poor
credit, it may be unwise to secure a home equity loan with a traditional
mortgage lender. Most likely, your credit score will fall short of
their requirements for a prime loan. Hence, the rate obtained on a home
equity loan will be slightly higher. However, you can avoid a high rate by
using a high risk or sub prime lender.Applying for a Home Equity LoanAlthough poor credit mortgage lenders are flexible, they do not approve
risky loans. For this matter, lenders carefully assess several factors
before granting a poor credit home equity loan. For starters, lenders
will review credit history. There are limits to bad credit equity loans.
To qualify, a homeowner’s FICO score cannot fall below 540. Some
lenders set the minimum credit score at 500. Also, mortgage payments must be
current to qualify.Try using one of ABC Loan Guide’s Recommended Poor Credit Home Equity Loan Lenders.Furthermore, mortgage lenders require homeowners to be employed and
able to repay the funds. Home equity loans create a second mortgage. If
approved for a loan, you must be able to afford an additional monthly
payment. The majority of mortgage lenders will not approve a questionable
loan. Thus, homeowners will be asked to supply W2’s, tax returns, etc.