Friday, September 18, 2009

How to Get the Best Home Equity Loan Even With Bad Credit

By M. Adams

When you apply for a home equity loan it means that you can draw on the money (equity) you have saved up in your home. So getting a home equity loan when you have bad credit is not as difficult as you might think because the equity (money) you have in the home serves as the collateral for the home. In fact, when you get credit and secure it with the equity you have in your home you are probably going to get better interest rates than with any other type of loan.

Choosing a home equity loan to help you pay off your creditors is a good idea, because this line of credit gets rid of that debt and helps you re-establish good credit, but be aware that when a bank knows you have bad credit often they will offer you a loan with higher interest rates and fees. You don't have to take this type of loan. You have something to secure the loan, so you are in a good position to shop for the best option.

When you have poor credit you need to be really careful with what a bank offers you and the terms of the line of credit. Rates for a home equity loan can either be fixed or adjustable, and although adjustable rates start out lower than fixed rates they tend to increase over time. Because this is an equity loan and not a second mortgage there are no closing costs, so you wont have those upfront costs.

You want to watch for added fees, like minimum balance fees, early payment fees and others. Be sure you understand a contract and shop around for a home equity loan. Remember you have the advantage in this type of loan because you are offering collateral (your home). But precisely because you are offering your home as collateral, you don't want to be taken advantage of and you want to find the best loan available.

Before you even walk into a bank you should look online for different equity loan options, and read what each loan is offering you. When you have two or three options you like call the lender and talk to a loan officer in person. Always trust your instincts and go with the lender you feel the most comfortable with, but one who offers you the best loan and the best interest rates.

home equity loans bad credit can give you the chance to get back in front of your finances. Make sure to weigh all options and look at other loans that are available. People in this situation can get almost any type of loan, and can even get no credit check personal loans.

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