Bad Credit - Mortgage

Bad Credit Home Loan
Bad Credit Mortgage
Bad Credit Equity Loan
Equity Loans With Bad Credit

Many people with bad credit will be tempted to take out a home equity loan because such loans are easy to get.

Homeowners should think twice about getting such loans because they are really a sort of additional mortgage on your house. When you get an equity loan, you’re using the potential equity or value of your home as collateral. The idea is that the loan can be paid back by the money not used to pay off the existing mortgages on the house if it is sold.

The house is collateral for a equity loan

People with bad credit are able to get home equity loans because the house itself is being used as collateral. This means that lenders are able to cut those people some slack.

There are limits to home equity loans that greatly restrict their potential use. First you actually have to have additional value or additional in your home. This means that you have to be able to sell your home for more than it is mortgaged for. If you can’t do that because of the weak real estate market you may not be able to get a home equity loan or pay off an equity loan.

This means that you shouldn’t take out a home equity loan if you’re planning to sell your house in the near future. You may not be able to get a sales price high enough to cover the cost of the home equity loan.

A equity loan with bad credit may come with a higher interest rate

Another restriction to home equity loans for people with bad credit is the interest rates charged. Generally, lenders are willing to give people with bad credit equity loans but they charge them a higher interest rate. With mortgage interest rates at historic lows this means that interest rate will still be low.

Whenever you take out a home equity loan you will increase your mortgage interest. That means you’ll have a higher house payment because of such a loan. It also means that you’ll get less money back if you sell your home.

Selling a house with an outstanding equity loan

When you sell a home with an outstanding equity loan part of the sales price will be used to pay off the loan. That means you’ll get less for your home if you have a home equity loan. This means that you should try and pay off home equity loans as quickly as possible.

A home equity loan is a line of credit that you should only tap into when other sources of loans are unavailable. This is even more so for people with bad credit because they will have to pay more home equity loans.