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Home Equity Loan

r0930d
New Member

Home Equity Loan

Any advice on getting a Home Equity? I have a little over $100000 in equity in my home but I am not sure I could get approved. I have had some unexpected expenses this year (funeral expenses, helping my son with his last semester of college etc) so my credit card debt went up by quite a bit which lowered my credit score by about 75 points I want to take out the home equity so that I can pay off all my debt and just have one payment. But seems to be a catch-22 I can't get the loan because my debt is too high but I need the loan to pay off the debt...scores are now 629 630 & 642. Thanks for any advice!
Message 1 of 7
6 REPLIES 6
RonM21
Valued Contributor

Re: Home Equity Loan

Welcome to the forums! I admit I am not very much in the know when it comes to home equity loans. But how high is your CC debt?

                

Total CL: $304.1kUTL: 3%AAoA: 6.8yrsBaddies: 0Other: Lease, Loan, *No Mortgage, All Inq's from Jun '20 Car Shopping

BoA-55k |DISC-40.6k | PENFED-38.4k | AMEX-37k | NFCU-37k | LOWES-35k | ALLIANT-25k | BARCLAYS-15k | CITI-11.7k | CHASE-10k

Message 2 of 7
Sandibeach22
Valued Contributor

Re: Home Equity Loan

Going for a HELOC right after the holidays.  If you're total equity is 100k, I'm not sure if you can take it all.  If you can, I would think your interest rate would be high.  They told me to keep it at 75/25.  I just want enough for a pool and what goes with it.  Did you speak with a loan officier?  If you want to consolidate your debt, they shouldn't hold it against you.  Makes no sense.  Cash out refi might be easier to get?  


FICOS: EQ-812 TU-811 EX-818 Goal - 840-850 Across The Board
Total Credit Lines - 506K Gardening....
"I am the master of my fate and the captain of my destiny" Nelson Mandela
Message 3 of 7
r0930d
New Member

Re: Home Equity Loan

Thanks for responding! CC debt is around $9000 not that high but both cards are very close to their limit which lowered my scores a lot...I am really only looking to take out about $20000-25000 I haven't spoken to a loan officer yet...think I'm just nervous about getting turned down ☺
Message 4 of 7
Sandibeach22
Valued Contributor

Re: Home Equity Loan

I would definitely speak with one.  I can understand how you feel.  It's a big step.  They can steer you in the right direction.  They can help you.


FICOS: EQ-812 TU-811 EX-818 Goal - 840-850 Across The Board
Total Credit Lines - 506K Gardening....
"I am the master of my fate and the captain of my destiny" Nelson Mandela
Message 5 of 7
RobertEG
Legendary Contributor

Re: Home Equity Loan

A HELOC is actually not a "loan," it is a revolving "line of credit", where they approve up to a certain amount for use at your later discretion.

Your payments thus revolve around the balance you have used.

While a HELOC is a revolving line of crediit, if usage is above a certain amount (I believe to be $35K), FICO will treat it for scoring purposes as an installment loan.

 

Since you are placing the equitiy in your home as collaterall, the risk is much lower to the lendor, and thus qualification is not the same as for a normal loan.

Speak with your creditor.  Qualification may be easier than you anticipate.

Message 6 of 7
Revelate
Moderator Emeritus

Re: Home Equity Loan

DCU HELOC is 3.25% currently at 675 EQ FICO 04 (FICO 5 here).  Robert is correct in stating a HELOC while tied to the house equity, isn't a loan per se though it can function similarly.  

 

Rates are pretty low frankly and so are the underwriting criteria.  It shouldn't be hard to get it underwritten though I think what I'd do is a two step since as you stated you lost a bunch with the credit card balances: get a loan since we're talking fairly small dollar values, you don't care what the APR really is, THEN go get a HELOC or other loan at a better rate frankly after the balances are mostly paid down.

 

Alternatively you could possibly pick up a credit card or two which might improve your limits, but I think the two step refinance plan is better since higher CL's are a bit difficult with current heavy utilization.

 

Go make friends with a local CU and see if they can help you refinance the CC debt, and look into something like Lending Club or Prosper even if it's at 20% or higher, anything that doesn't have a pre-payment penalty is just fine for the first loan and then pay it when you can sort it at a better APR using the equity in your house at a much more favorable rate.  Ye local CU might have a lower UW criteria too on their top end HELOC rate too, ask around.




        
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