No Equity? Need a Home Equity Loan? 3 Ways To Get Approved
You probably already know that a Home Equity Loan is a great way for home owners to get cash fast for things like college funds, debt payments and other expenses. But what if you don't have any equity in your home? Sounds odd, but it's possible, especially if home values have recently dropped or you have a second mortgage on your property. Fortunately, it's possible to still get approved for a Home Equity Loan. However, you'll probably have to:
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Pay higher interest rates and fees.
For the most part, expect to pay significantly higher interest on these types of Home Equity Loans. In many cases, the interest can be up to 6% higher than a typical Home Equity Loan, though it's possible you'll only have to pay 2% or so more. Moreover, you'll pay higher closing costs and other fees when it's time for payout. How much you'll pay depends on your personal situation--the lender, your credit history, your income, etc. But overall, expect to have much higher costs.
Pay Private Mortgage Insurance (PMI).
PMI is required on most mortgages where the down payment is less than 20% of the home's value. If you get a Home Equity Loan without any equity in your house, you'll have to pay PMI, too. The amount varies, depending on your lender, your home's value and other circumstances. However, it can easily tack on anywhere from $50 to $120 to your monthly payment. And you won't be able to drop PMI until you have 20% equity in your home.
Skip tax breaks.
In most states, Home Equity loan interest is tax deductible--any interest you pay during the year can be deducted on that year's taxes. However, because of the nature of these types of Home Equity loans, chances are you won't be able to take this tax deduction on April 15.
Although Home Equity Loans are often a cheap, smart way to borrow money from yourself, they tend to be the best deal if you already have equity in your house. If you try to borrow before you've built up some equity, you'll pay higher costs and get fewer perks.
Our Recommended Home Equity Loan Lenders:
Top Recommended Companies To Refinance With:
(updated ):
Act Now! Lower your monthly mortgage payment!
- Competitive rates and no hidden fees
- Bad Credit OK
- New Purchases, Home Equity & Refinance
- One dedicated mortgage banker from first call to closing
- Quick Application with worthwhile results
If you are looking for a mortgage loan but have "less than perfect credit" this company has options for people with credit problems. Complete a short form and get one dedicated mortgage banker from first call to closing with a simple, straightforward process.
Mortgage rates are still low. Refinance & Lower Your Payment!
- Get Started on a Lower Payment Now!
- America's #1 Online Lender
- Save More and Spend Less!
- No Obligation and Free Expert Advice Another Great "bad-credit" Mortgage Company! QuickenLoans is also a competitive mortgage company for people with all types of credit including poor credit. Refinance or get new mortgage offers from this reputable Web based mortgage lender.
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