Can You Take Equity out of Your Home with Bad Credit?
Can You Take Equity out of Your Home with Bad Credit?
You might think that there aren’t many people who have a lot of equity in their home and also have credit issues. After all, you have to get approved for a mortgage and then make regular payments on that mortgage for the better part of a decade to build up the level of equity that would make a loan against it worth the fees.
However, a lot of people run into financial difficulties after they have been making their mortgage payments for a long time. Sometimes it’s a medical condition that keeps one of the two income earners in the home from being able to earn a salary, and the family depended on both salaries to make ends meet. There are also the costs associated with treatment of that condition, so you can get into a situation where you’re bleeding cash but you’re making that mortgage payment every month after all, you need a place to live. So over time your house can aggregate a ton of equity, but your credit can suffer, as you run up big credit card balances and bounce around from missing one card payment to a car payment, getting to the point where all of your creditors seem like they’re hounding you at once.
Take out equity with bad credit
When you have bad credit and need money, your options shrink considerably, but the interest rates associated with those options increase. The equity in your home might be the only way for you to get a loan at all (if your credit is bad enough), or (if your credit is a little better) it might be the cheapest way for you to get a loan on the basis of interest rates.
If you decide to take out equity with bad credit, you can face terms that are less favorable than you would if your credit were more pristine. …