Bad Credit Home Equity Line of Credit - Choosing the Right Lender

A home equity line of credit allows you to draw on your home's equity
without having to pay for closing rates. For those with bad credit,
credit secured by your equity can provide you with low rates. Using your
credit wisely, you can use a line of credit to reestablish a good credit
rating. However, you need to choose the right lender to be sure you are
getting a good deal on your rates and fees.

What To Look For In A Home Equity Line Of Credit

With poor credit, you need to be especially careful of the terms you
agree to with a line of credit. With most lenders, you will not have to
pay any closing fees. So you save on upfront costs of a second mortgage.

Your rates can be fixed or adjustable. With most lenders, adjustable
rates start out lower than fixed rate loans. Lines of credit also allow
you to borrow funds as needed. So you only pay interest on the amount
you use.

Fees are also part of a line of credit. You may possibly have early
payment, minimum balance, or other fees. Before signing a contract,
understand how fees will affect your credit plans. For example, if you want
to pay off your line of credit in a year, then ask for an early payment
fee to be removed.

Different Lenders Mean Different Terms

Different lenders write their loan terms differently. Variations in
rates should be expected, but so should differences in fees, payment
schedules, and future refinancing possibilities.

While low rates are important, also take a look at terms when
considering lenders. Savings can also be found by picking financing with low
fees for balances and refinancing.

How To Compare Lenders

To compare lenders, you need to start by requesting credit quotes. With
adverse credit scores, work with sub-prime lenders.

Most companies use a website where you can enter your information to
get an instant quote. Besides looking at rates, also note the terms.

Most financial offers will disclose fees, payment structure, and
refinancing costs. If they don't list basic terms, then request additional
information before committing to an offer.