If you have recently gone through the process of bankruptcy it is likely that you will have found that your ability to raise new money through borrowing will be either limited or severely limited. If you do need to raise money through borrowing, as many do, maybe for home improvements, maybe for a much needed holiday, or just simply for college tuition then you are quite likely to come up against dead end after dead end. The one saving grace might be that you own your own home, because if you own your own home then the possibilities of raising a home equity loan despite bankruptcy may still be realistic. You can potentially still get a home equity loan after bankruptcy, which we call a bankruptcy equity home loan.
It will not surprise you of course that following a bankruptcy process the banks, credit unions and other lenders would be cautious about lending you any money, but most especially a personal unsecured loan or provide you with a credit card. Your credit history will count against you almost disastrously. But, home equity loans are another matter. Remember they are secured on your property, or at least the equity in your property (equity being the difference between the value of your home and the outstanding amount on your mortgage), and as a result the lenders or relevant financial institutions are more inclined to consider the loan as a great deal less risky. In fact they will potentially view it as so much less risky that they will overcome their reserve and be pre-disposed to lend you the money (provided of course you are able to satisfy them that the equity in your property is indeed real).
Now, before continuing, a word of warning. If you take out a home equity loan it is secured on your property. This means that if you do not keep up the repayments on your loan the lender may well end up forcing a sale of your property in order to realise sufficient funds in order to settle their outstanding debt. As a bankrupt, with very little in the way of financial strength in depth this process would be nothing short of catastrophe. The message here is to take care. Bankruptcy is stressful enough. Do not take the risk of getting into more financial difficulties unless you are absolutely sure that you can cope with it.
So What Are The Benefits Of A Bankruptcy Equity Home Loan?
In these difficult times the home equity loan is potentially a lifeline of credit for many families. There are many reasons why access to a credit line that can be safely drawn against the equity value of your property, available when you need it and making sure that you make the most of the assets that you own. You might use a home equity loan for debt consolidation purposes, or just to catch up on a number of outstanding commitments. You might use them to improve the rates that you are currently paying on your existing debts or pay off credit cards. The reason why home equity loans are good for this is because typically have lower interest rates charged. The lower interest rates are a result of the fact that the lender is more comfortable that the loan will be repaid than unsecured loans, due to the security of the property.
Often home equity loans are a preferred option for raising finance because they are less troublesome, quicker and less expensive in the form of charges. The process of remortgaging a property can be time consuming from a research perspective, complex from a transactional perspective and quite stressful. Whereas the home equity loan is comparatively less fraught with problems and complexities despite giving access to similar sums of money. However don’t forget we are talking about a bad credit home equity mortgage and these are potentially slightly more complicated that otherwise.
What Sort Of Lender Will Provide The Bankruptcy Equity Home Loan?
You are a bankrupt. This means that you will not be able to get the best rates on home equity loans. However this does not mean that you will not be able to get a decent interest rate on your loan, only that you have to be realistic, the best rates will be reserved for the best credit risks, and property aside, the fact of your bankruptcy means you are not a strong credit risk. The upshot of this is that you will have to work hard at getting your home equity loan.
The first place you should try is probably your existing mortgage lender. They have the most recent experience of you as a borrower and if you have kept up with your repayments then you will already have passed two of the lending hurdles, that of being known to the lender and having a payment history. If they are comfortable with you as a mortgage holder and are happy that you have kept up to date with your payments then they may well be willing to provide you with further funds. In addition they may well be willing to match the mortgage rate you are being charged which would be a good result. If they do then you would describe this as a bad credit home loan mortgage.
If your mortgage company offers you a deal then this is great. But if they do and especially if they don’t you should not stop there. You should carry on and request quotes from other lenders who profess to offer money in exchange for security on your property. This process of looking around for the best possible offer is not only best practice, home equity loans are usually sizeable and the time spent looking for the right one will save you a great deal of money in the long run. Don’t be afraid to try a number of different sources. As a bankrupt you are unlikely to suffer unduly from requesting quotes from as many lenders as is necessary. Remember, and you should not let this get you down, even with a property as security many lenders will still not be interested in providing a home equity loan after bankruptcy.
You should aim to select at least four to five offers from different bankruptcy equity home loan providers. Compare the length of the loans, the monthly repayment amounts and the interest rates on the loan. Put the offers in a column, and then the criteria you think are important in a row and mark the offers accordingly. Be systematic and the best offer for you will become clear quite quickly.
As a bankrupt, the bankruptcy equity home loan will never be easy to achieve, but with a property on your side and a bit of perseverance a good deal is very much achievable.