Friday 30 March 2012

How To Qualify For Mortgage Financing Despite Bad Credit

By Louis Kinchel


You need not feel discouraged if you believe that your less than sterling credit history will make a difference when it comes to applying for a home equity loan or property refinance option. In fact, there are many options you may have available to you. While you would certainly want to improve that bad credit of yours, that per se would not preclude the possibility of refinancing your home or applying for home equity or a line of credit. The lending industry has established new guidelines that make it much easier to refinance your existing mortgage or to get a home equity loan. And that applies as well for individuals with bad credit - you too can find a loan option that would provide you with a very reasonable interest rate and terms.

Nowadays, a lot of people are opting to refinance in order to make those necessary improvements and renovations or to consolidate multiple credit card debts or other payables. Many lenders will offer you as much as 125% of what your home is worth, even if your credit history is less than perfect. Some of the most important factors that would be looked into when evaluating whether your loan would be approved or not include the value of your current mortgage package, your interest rate and the present terms, your intended duration of stay and the total amount of debt you presently owe. You would be generally assured of qualifying for a lower rate of interest if you have equity in your home, compared to having none, or very little of it.

A home equity line of credit is something that works like a revolving account and your home is used as security against the loan. And you will only be able to qualify for a specific credit amount under this home equity line of credit. The maximum amount that you can take out will be affected by your credit limit. While there is a chance you might be qualified for a fixed interest rate, you would be typically furnished with a variable interest rate under the home equity line of credit. How they work is that you will have a set amount that you will be able to borrow at any given time, and you shall not be allowed to borrow more unless you repay the earlier amounts. There may be situations or packages where you would be only allowed to borrow the money accordant to a pre-specified schedule.

Receiving a home equity line of credit is often the ideal solution for those that want to remodel, put kids through college, or if extra cash is needed in the event of emergency financial situations. You are given access to extra cash, and knowing that you have carte blanche to withdraw whenever necessary can allay a lot of those pertinent financial concerns.

Refinancing your existing mortgage, or obtaining a home equity loan has been a great help to American citizens looking to meet their financial plans. Being ineligible to apply for a loan just because of bad credit history is, to put it loosely, "old hat."




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