Home Equity Loans with Bad Credit: Why Bankruptcy is Ignored

by

Mary D Wise

Finding funds to alleviate financial pressures can be extremely difficult when bad credit is in the equation. But even when banks are not willing to take a risk on lending large sums of money, there is a source of collateral that can outweigh all their concerns – your home. In fact, getting home equity loan with bad credit is almost too certain.

With bad credit in the mix, this should not be the case. But the value of the equity tied up in a home is much greater than the figure calculated at the time. Of all the forms of security that can be offered as part of a loan application, equity is the most accepted. So much so, in fact, that even with a history of bankruptcy, an applicant can be approved. What this means is that homeowners have the greatest potential to secure funds at any time, thanks to the home equity loans that are available. So, financial hardship can be quickly and effectively dealt with. Equity Loans Explained The basic concept is simple. Each time a homeowner makes a repayment on their existing mortgage loan, the balance reduces. A payment effectively buys back that share of the house value and because ownership (equity) increases, a home equity loan with bad credit becomes possible. For example, if a home was purchased with a mortgage worth $200,000 a decade ago, then 10 years of repayments will have seen perhaps $75,000 of the mortgage paid off. That means an equity of $75,000 exists. If the value of the home has increased in the meantime (say to $250,000) then that adds to the equity value too, increasing it to $125,000. So, even with a history of bankruptcy, the homeowner owns something that can provide security for a home equity loan of $125,000. And because of the enduring value of property, the security is, literally, as safe as houses. Why Bankruptcy Does Not Matter We would expect that a bankruptcy ruling would have a definite influence over any application for a large sum loan. But even with a home equity loan with bad credit such rulings have no effect on applications. This is because lenders treat land and property very differently from other forms of security. The fact is that buildings and land never depreciate. The market value may slip, for example during a recession, but the value is certain to increase again as the markets recover. When compared against other items typically used as security, it is clear to see why even a history of bankruptcy should be null and void in any assessment. A car, for example, can age and become worthless, while jewelry is subject to the markets and to fashions – gold is just not valuable as it once was. There is a sense of temporary about these items, but land and buildings are permanent fixtures, making home equity loans a safe investment. Finding the Right Lender The task of finding the right lender, with the best loan terms is made easy by the growth in online lenders – even for home equity loan with bad credit. Generally, they charge the lowest interest rates. But caution is advised with online lenders, and it is important that they are checked out with the Better Business Bureau. When an applicant has a history of bankruptcy, it may be better to meet and discuss options with a mortgage lender. They can usually offer a good overall loan package, and have the contacts to get the best terms. But with a home equity loan from any lender, approval should be almost certain.

Mary Wise is a certified loan consultant who helps people get approved for

Guaranteed Bad Credit Personal Loans

and

Bad Credit Mortgage Loans

. To get help with your financial situation you can visit her at

badcreditloanservices.com

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Home Equity Loans with Bad Credit: Why Bankruptcy is Ignored