Home Equity Loans After Bankruptcy - Choosing A Low Rate Lender
Written by: Carrie Reeder
After a recent bankruptcy, your loan options are limited. Those
needing quick cash for home improvements, wedding expenses, or
college tuition may be unable to secure the necessary funds.
However, if you own a home, getting approved for a home equity
loan following a bankruptcy is a realistic option.
Understandably, banks and credit unions are reluctant to approve
an unsecured loan or credit card application. Because home
equity loans are secured by your property, lenders are more
equipped to take a gamble. However, if the loan cannot be
repaid, you will lose your home.
Benefits of a Home Equity Loan
Homeowners obtain home equity loans for various reasons. In
fact, some apply for these loans in an attempt to avoid
bankruptcy. Home equity loans are perfect for debt consolidation
and paying past due utility bills. The interest rates are
typically lower than credit cards and most consumer loans. Thus,
homebuyers are able to payoff debts, improve credit, and save
money at the same time.
Some prefer home equity loans because they do not involve
closing costs. Refinancing an existing mortgage is great for
obtaining a lower rate and receiving cash. However, because a
new mortgage is created, homeowners are required to pay closing
fees, which could amount to thousands of dollars.
Home Equity Loan Lenders
Getting a low rate on a home equity loan following a bankruptcy
will require work. Homeowners must be prepared to research
various lenders and negotiate a good finance package. To begin,
submit a loan application through your existing mortgage lender.
If your payment history is acceptable, the lender may consider
this when approving your application. Thus, you may avoid paying
a higher rate.
If your lender offers you a seemingly unbeatable rate, do not
stop here. Continue to obtain quotes from other money sources.
Shopping around for home equity loans online is popular.
Mortgage websites make it very convenient to get approved for a
loan without leaving your home. Simply submit your loan
application and wait for a reply. Within a few hours, lenders
will contact your with their best offer.
After obtaining at least four offers from home equity loan
lender, compare each offer. What are the terms? Interest rate?
Monthly payments? Subsequently, pick the lender that offers the
most desirable mortgage package.
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