5 Reasons To Get A Bad Credit Home Equity Loan
Having bad credit is not the end of the world. There I said it. You can get a loan and you can avoid loan sharking. Now, let’s be honest, bad credit does make getting a home loan more difficult.There are lenders who will make home equity loans to customers who have had past credit problems, as long as they have addressed the cause of the credit problems. As you use this loan, with on time payments, you will improve your credit score. There are 4 ways that you will benefit from using a bad credit home equity loan.
Equity Loans – Proven to Be Helpful
Home equity loans are like partial mortgages. These loans, even a home equity loan with bad credit, allow you to tap into the value of your home. This can be useful if you are looking to increase the value of your home through expansion or renovation. Using a home equity loan in this way is actually an investment. It’s an investment that pays off if you expect to be in your home for several years.
Reduce Monthly Payments
Mortgage, a even home equity loan with bad credit, have lower interest rates than most other types of loans. Taking out a home equity loan may allow you take pay off high interest rate debts on credit cards, store cards or auto loans. This could actually bring down your total monthly payment. In fact, by lowering your interest rates you are actually saving money long term too. The lower interest means you can pay off the home equity loan fast if you choose. In many ways this is a self-funded debt consolidation. If you need more time to pay off your debt, consider lengthening the duration of the loan. By doing this you’ll lower the monthly payments even more. Exerts suggest you save at least some of those savings in case you have one or two unexpected bills pop up.
Afford Emergencies – Avoid Loan Sharking
Unexpected expenses are one of the most common reasons people turn to loan sharking. The car breaks down, the water heater burst or the furnace stops cranking out heat in the middle of winter. Using an equity loan (or more likely a home equity line of credit) as an emergency fund to pay for emergencies beyond your control should be approached with caution, and may represent a last ditch option. It can allow you to weather the storm, but if you lose your income, you’ve placed an additional long term strain on finances.
Education & Student Loans
Home equity may be a less expensive alternative to traditional sources of educational funding. Interest rates on equity loans may be lower and the amount of cash you’re able to access with a single loan can be higher. This can be an excellent use of home equity, but you don’t want to borrow so much that you over leverage.
Borrow – But Use Wisely
.Being weighted down with high interest rate loans and debt is a serious matter. In the end, equity loans and lines of credit can provide you the financial space you need in a tight time or allow you to make better use of your home’s value. If you decide to use your home’s equity to pay off bills, make sure you pay off the most important bills and higher interest rate bills. This will have the biggest impact on your finances. Using a bad credit home equity loan in this way will allow you avoid falling victim to predatory loans.