Home Equity Loan - Home Equity loan when needing a small amt. of money?

Home Equity loan when needing a small amt. of money?

I know I do not understand when to get a home equity loan and how they work. My husband and I have fallen on bad times financially, but will be making a great deal more money in about 2 months. Basically, we need about 7,000 dollars to consolidate debt and become current with some payments. We have only lived in our home for 3.5 years -- so do we even have equity? Our credit scores are not good - high 500's...but we want to change that. I do not know if we can get a personal loan? Please educate me on home equity. Thanks!

Public Comments

The difficulties in obtaining a personal loans for people with bad credit can be best understood by those who have suffered with a history of bad credit. Personal loans such as these provides a manner in which they can recover there dignity and improve there overall credit rating. A personal loan may help you to payoff those smaller debts that seem to keep lingering around that you may have incurredcredibility and making him a high risk for a personal loan. This however is not always the case. People with a bad credit history may also be considered for personal loans.
It is very unlikely in this credit environment you would be able to get a home equity loan under your circumstances. You had better consider getting second jobs or selling something. Sorry.
First, its a bad idea to shift unsecured debt to your home. If you can't make the payments, you lose your home. Second, if you've only owned your home for 3.5 years, you may not have much equity, especially in this current market where home values are declining. How much is your first mortgage and what is your home worth? Third, a poor credit history might just make it difficult to qualify for a home equity loan. Even if you do, the interest rate would be horrid. Since you will be making more money in a couple months, start working on a plan to pay everything off. Make a strict budget -- eliminate all the extras. Take every penny you can squeeze out of that budget and put it on the highest interest rate debt, while making minimum payments on the rest. When the highest interest rate debt is paid off, move to the next till they are all paid off. Start with credit cards, then move to installment loans. Once you have those paid off, you can work on settling derogatory items on your credit files. If you really work at it, you could easily pay off $7K worth of debt in less than a year.
If you need just a small amount of money, maybe you should try applying for a home equity credit line instead. Chase and Wells Fargo have pretty good home equity credit programs.
Like any other type of loan, there are some factors you should look into carefully in the bad credit home equity loan. Check out the interest rates and conditions of the loan before taking any decision. Most of the times, they are not borrower-friendly like those for the good credit costumers. But this is due to the fact that bad credit home equity loan companies take on more risk by lending to persons with bad credit and they want to compensate their risk. When you shop around for the rates, you can get a better rate, though not as good as the rate for the good credit customers. http://debt-trap.com/category/Bad-Credit-Home-Equity-Loans.html
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