If you need to borrow money, you might be able to borrow it against your current home. This is called getting a second mortgage or home equity loan. As long as you have equity in your home and have a positive history of paying mortgage payments on time, you should be approved for the loan. Here are some tips for applying for a home equity loan.
Consider Your Current Financial Situation
Before you apply for a home equity loan, make sure you can afford it. With this type of loan, you are going to be required to pay an additional payment each month along with your current mortgage payments. If you are already struggling to make the mortgage payment each month, this might not be a great option for you. Take a look at your monthly expenses and income to make sure you can afford the extra payments.
Know Your Credit History and Score
As with mortgages, home equity loans require you to have a decent credit score and rating. While they might not be quite as strict as with other home loans, it is still something the lender will use to determine your eligibility. A good place to start is by getting a copy of your credit report and making sure everything on it is accurate. If you notice something that has already been paid off, but appears as a collection, contact the credit bureau to have it removed. Make sure you know your credit score so you are prepared.
Contact Different Financial Institutions
While it might seem easier to have your own personal bank or credit union provide you with the second mortgage, this isn't always the best option. You might find that while your own bank denies you, another one would accept your home equity application. It is good to shop around in order to find the best interest rate. The interest rate can make a big difference in how much you end up paying for the loan overall, even if it is only a small percentage difference from your own bank's offer.
Talk to a Financial Advisor
In the end, it helps to find someone who understands the process of applying for a home equity loan and what it will end up costing you. Speaking to a financial advisor can help you make the final decision and ensure it fits within your current budget.
Talk to someone from a company like First Mortgage Company, Inc. about their various loan programs and how you might qualify for a home equity loan.Share