After filing for bankruptcy, you don't have many loan options. People who need money quickly for things like home repairs, a wedding, or college tuition may not be able to get it. But if you own your own home, it is possible to get a home equity loan after filing for bankruptcy.
It's easy to see why banks and credit unions are hesitant to approve an application for an unsecured loan or credit card. Since your home is used as collateral for home equity loans, lenders are more likely to take a chance on you. But if you can't pay back the loan, you will lose your home.
What a home equity loan can do for you
There are many reasons why homeowners get home equity loans. In fact, some people try to get these loans to keep from going bankrupt. Home equity loans are a great way to pay off late utility bills and combine debts. Most of the time, the interest rates are lower than those on credit cards and most personal loans. So, people who want to buy a home can pay off their debts, improve their credit, and save money at the same time.
Some people like home equity loans because there are no costs to close on them. Refinancing a mortgage is a great way to get a lower interest rate and get cash. But because a new mortgage is made, the homeowner has to pay closing costs, which could be as much as a few thousand dollars.
Home Equity Loan Lenders
After bankruptcy, it will take work to get a low rate on a home equity loan. Homeowners need to be ready to look into different lenders and negotiate a good package of loans. Start by applying for a loan through your current mortgage lender. If you have a good history of making payments, the lender may take that into account when deciding whether or not to give you the loan. So, you might not have to pay a higher rate.
If your lender gives you a rate that seems impossible to beat, don't stop here. Continue to get quotes from other places that lend money. People often use the Internet to look for home equity loans. Mortgage websites make it very easy to get a loan approved without having to leave your house. Just send in your loan request and wait for a response. Lenders will get in touch with you within a few hours with their best offer.
Compare each offer after getting at least four from home equity loan lenders. What's the deal? Rate of interest? Payments every month? Then, choose the lender whose mortgage package is the most appealing.
