Still have equity in your home? Use it to dig out of trouble
Thought it was finished? Figured your credit was so impaired that you would never recover? Wrong!
If you own a home, a home equity loan will let you borrow against what you have already put in to your house over and above loan repayment and interest. The real estate market in your area has probably shared in the overall advance of RE prices over the last several years. True, the market has crashed and much of those values have been destroyed. However, there is still a lot of that appreciation left intact and now maybe is the time to tap into that or to increase the amount borrowed if you already have a home equity loan outstanding. While your equity may be limited or non-existent, you may be able to borrow up the full market value of the appraised value of your home and even more in some instances. You can use the proceeds to consolidate bills, fund college tuition, or for any other purpose. Mortgage lenders are offering interest rates that you may be able to budget with reasonable terms on home equity loans, even if your credit history is miserable.
A home equity loan will give you the wherewithal to reduce or pay off your debts and could become a basic building block to rebuild your credit. You can apply the proceeds to any purpose and you may even be able to lower your monthly mortgage payments at the same time. While your credit may be bad, lenders are looking for your business and have a number of options and choices if you apply for a home equity loan.
Like any loan situation, there are a number of less desirable lenders operating who it is wise to avoid. In the situation you are in namely living with a bad credit history you would be advised to put your situation on the table with a qualified credit counselor before you make any commitment.
Go over your whole situation, plans and prospects with the chosen counselor and follow their advice as to appropriate institutions to deal with. One of the key elements in establishing a relationship with a counselor is to make a complete inventory of all your bills, commitments and expectations. Construct a financial picture of your situation and develop a pro forma budget to discuss with him/her. Once you see the complete picture and do some research on your own situation you will be able to see things more clearly and your counselor will be able to recommend a course of action to reduce debt and restore your credit to something more normal. A home equity loan may well fit in to such a plan.