HELOC with 630

[liz01]

Are there any bank/lenders that will provide a Home equity line of credit (or home equity loan) to someone with a score in the low 630s? The home is owned free and clear, no mortgage, valued at 100,000 and I am looking to get a loan for $40,000. I don't want to hurt my score more by applying if there's no chance of being approved. Are there any banks that do a soft pull, or any services that would compare offers from multiple lenders?

Thanks in advance!

[StartingOver10]

Try FHA - it won't be a HELOC though - it will be a first mortgage.  Or try a portfolio lender: small regional banks in your area may issue a HELOC at 630.  A HELOC is considered a more risky loan to a lender than a standard mortgage so the fact that you own the home F&C is to your benefit so the lender gets first place.  The issue here is this: do you actually need a HELOC or will a standard cash out mortgage work?

[liz01]

Will I be able to get an FHA mortgage since I already own the home? I want to use the money I receive to do some renovations, pay off credit cards (less than $1000 owed) and to pay off an auto loan that has a high interest rate. Would an FHA loan allow this? Thank you for such a fast reply! I appreciate your input!

[StartingOver10]

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@liz01 wrote:
Will I be able to get an FHA mortgage since I already own the home? I want to use the money I receive to do some renovations, pay off credit cards (less than $1000 owed) and to pay off an auto loan that has a high interest rate. Would an FHA loan allow this? Thank you for such a fast reply! I appreciate your input!

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Sure - you can finance with an fha mortgage as long as you meet the other guidelines. It is handled like a 'cash-out refi' because you own the home so there is a funding delay after you sign the paperwork of 3 business days.  

How long have you owned it? There is a time period of ownership required when you are taking cash out - I forget the amount of time. One of the LO's will know though.  Make sure to ask the lender before you apply if you have owned your home for a short time period.  

[liz01]

I have owned it for 3 years. Thanks again!

[StartingOver10]

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@liz01 wrote:
I have owned it for 3 years. Thanks again!

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Oh, you are fine from an ownership POV.  I *think* the time period is 1 year but I could be off on it as I just don't remember, but it certainly is less than 2 years so you are in good shape.  The amount you can borrow is based on your DTI. 

[liz01]

Great! I'll give it a shot! Are there any specific lenders you would recommend I look into?

[StartingOver10]

Yes, I sent you a pm with a couple of excellent lenders