Why Home Equity Loans Are So Hard To Find

By Michele Lerner
Mortgage Credit Problems Columnist

If you are a homeowner looking for debt relief, you may be considering applying for a home refinance or for a home equity loan since interest rates remain historically low. If you need a bad credit mortgage lyou may find yourself frustrated at the lack of a positive response from lenders.

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If you have applied for bad credit mortgage refinancing and been turned down, you may want to complete the quick form on this page to compare mortgage rates on home equity loans.

Credit Challenges for Bad Credit Mortgage Loans

A recent article in Kiplinger's Personal Finance said, "It can still be maddeningly difficult to land a loan, even for folks normally thought of as low-risk, slam-dunk borrowers."

A Federal Reserve Board survey in January 2010 of senior loan officers showed that 13.2% had toughened their mortgage terms in the previous quarter. When applicants with good credit cannot always qualify for a loan, those who need bad credit refinancing for debt relief are likely to have even more trouble gaining approval for a home refinance or a home equity loan.

Before you give up on applying for home equity loans, consider some factors which might improve your chances of a bad credit mortgage refinancing.

Factors to Increase Your Chances of Home Equity Loan Approval

  1. The more equity in your home, the more likely you are to be able to access it. Your home equity (the difference between what you owe on your mortgage and the appraised value of your home) can be your best asset when it comes to applying for a home equity loan. If you have 50% or more equity, you may be able to borrow some of that with a line of credit or loan. Your credit score is less important when you have more equity.
  2. Consider cash-out refinancing with an FHA mortgage. You can go as high as an 85% loan to value on a cash-out refi and use the extra funds to consolidate higher interest debt.

The best way to find out if you qualify for a home equity loan which you can use for debt relief is to complete the form on this page and get started comparing possible loan offers.



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