We all have unexpected expenses that arise, home repairs needed, car repairs, and the list can go on. A possible solution, besides using credit cards, could be to apply for a Home Equity Line of Credit (HELOC). What is a HELOC ? If you own your home and have a mortgage, this would be a second loan against your property. This is basically what the lender does: Appraises your home and subtracts the amount of your first mortgage. This leaves the equity that you have on your home. The equity is what the lender looks at to determine how much money they will be able to lend. They will only loan a percentage of the equity. So first step is to find out how much equity you have.

Secondly, find out what your FICO (Fair Isaac and Company) score is. You have 3 FICO scores, one for each of the three credit bureaus. Then they are averaged. Your score is an important piece in your loan process because the lenders will use this to determine how much equity money and at what interest rate they will lend to you. The higher your score, the better the terms will be for your equity loan. An average score is around 720 and a subpar score is below 640.

Next, you need to take a very good look into your finances. The lender definitely will. Do you have the money to pay for a second mortgage? Are you paying off some of these bills with the money you receive from your equity loan? All questions that need to be answered.
So, if you have a FICO score below 640, here are some items that need to be considered when applying for a Home Equity Line of Credit mortgage.

  • The more equity you have in your home, the better the chances of getting a loan.  You might not get as much money if your credit score was higher.
  • Know that your interest rate will likely be higher.  Just be careful not to fall into bad lending traps, like adjustable interest rates

Armed with the above knowledge it will help you navigate your way through the Home Equity Line of Credit process. Finding a trusted lender is next. Check out the Loanstore.com. Their experts will be happy to guide you through the process and help you make a good decision for your situation.