What exactly is a home equity loan and can I still get one with bad credit?
I do own my own home but am still paying off my mortgage. My son needs more money for college and we’ve tapped out on student loans and my credit cards are all maxed. I was wondering what I could do and thought that a home equity loan with bad credit might be an option. I don’t know if it’s a good idea though.
When you take out a home equity loan, you are basically borrowing money and putting up your house’s equity as collateral. It’s like any other loan but this kind states that the lender can take your home, in very plain terms, should you default on your loan.
When you’re looking for home equity loans, bad credit shouldn’t stop lenders from giving one to you. It doesn’t sound like you’re in too good financial standings so make sure that you will be able to pay back the loan because losing your home would not make your situation any better. I sincerely recommend you spend at least a day budgeting out the next few years of your life in preparation for this new loan. On the bright side, it will be a much better lending rate than other high interest rates in which only your credit is offered as collateral, but the stakes are higher for failing to pay.
I do think that your sons college education is a great reason to take out a loan though. If you have to make some sacrifices to make it happen and pay the loan back, I think that you probably should. Get your kid to help pay the loan back after he’s graduated and making money; the odds are that the loan will still be around then.
