Can I Apply for A Home Equity Loan With A Bad Credit And No Home Equity?
Posted By Terrie on May 8, 2010
The answer to these questions under certain circumstances can be “yes”. Sometimes a situation occurs when you do need fast cash if you face a family emergency.
What are your chances to get a loan against your home if you have not accumulated any equity on it?
Let’s see first how much can an average person borrow against their home equity. Basically you can calculate it by subtracting the amount you still owe on your mortgage from the entire amount you have borrowed to purchase your home. If the result is zero, you might want to consider the following: have your home appraised. Find out what the market value of your house it. If it’s higher than the amount you owe, you might have a great chance to receive a loan against your home without having any equity on it yet.
Normally people can borrow 100% or less of their home value. But in cases described above a lender might consider giving you a loan of up to 125% of your home value. Such loans represent a much higher risk from a lender’s point of view therefore interest rates will be considerably higher.
What other factor make an impact on your home equity loans interest rates? Your credit score. The better credit history you’ve managed to maintain, the lower interest rates you will be able to get.
Having said this, however, it does not mean that you are totally hopeless if your credit score is anything less than perfect. It is highly recommended to shop around and explore secondary broker agencies to find out what their interest rates are for a homeowner with lower credit scores. They might often agree to lend you money on better conditions than the banks would.
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