When it comes to accessing your Home Equity For Bad Credit, it can feel difficult to find a loan program that you can qualify for. Many lenders have rigid credit score requirements, which are sometimes above what the actual loan guidelines require. Most loan guidelines are set by agencies like HUD, Fannie Mae, or the VA. These agencies will set the minimum credit score requirements for their corresponding loan programs or will detail out their required methods of determining credit worthiness. A lender may impose more strict criteria above those minimum guidelines, and this is called a lender overlay.
This is why you may reach out to a lender for an FHA cash out refinance, and even though FHA does allow for credit scores down to 500, you may get denied with a 550 or a 575 credit score. That lender may have its own credit minimum above 500, and that minimum can vary company to company.
This can hold true for just about any loan program. It can be tough, when shopping for a loan, because you may not know where the best place to apply will be – and it can be hard to find helpful information about lender overlays just by doing research. Ultimately, it can also be stressful having your credit pulled multiple times when shopping for a loan and not knowing if it is the best place to apply to, for where your credit profile is at. This is where brokers come in.
If you are looking for a Home Equity Loan For Bad Credit, working with a broker can help you to avoid applying to multiple places and having your credit pulled multiple times. Brokers work with a pool of different lenders, and usually have a different lender that works best for every type of scenario. Bad credit isn’t always the barrier that people think it can be, for obtaining financing. Sometimes, it is just about finding the right loan program.
For example, at Independent Home Finance, Inc, we have a lender that does not have many lender overlays for FHA, conventional, and VA loans, which really helps our clients that have credit scores between 500 and 620. Then, when it comes to non-QM loans such as DSCR or hard money, we work with many different lenders to have a lot of options for each of our clients’ unique needs. Many clients will stick with us, because we help them find a loan program that they have the best shot at qualifying for and that best fits their specific needs very early into the process – usually after the first consultation. As a broker, we have a lot of options at our fingertips for different loan programs. We will explain each option, with the different pros and cons, to help find the best program for your needs. This is what makes us stand out, and why our clients love to work with us.
Although most loan programs do require at least a 500 credit score or above, there are a few select loan programs that may allow for a lower credit score. The most common is called a hard money loan, which we have many articles about on our website. At the top search bar, if you click “private home equity loan,” we have a lot of information posted about these types of loans. Hard money loans are a type of temporary financing that come with their own set of qualifying criteria. However, one unique aspect is that credit scores carry less weight in the application process and there is rarely a set minimum credit score. For our clients that are looking to pull cash out of their investment property, or for a business, these may be a potential option for them. These loans are 2-5 years in term, so if you do have bad credit, it is important to work on the issues most affecting your credit while you are in the loan. This will help in the process of refinancing out of the loan, if that is your exit strategy, once the loan term is coming close to an end.
Ultimately, a brokerage that specializes in working with bad credit may be able to help you meet your financial goals. It can also save a lot of headache, avoiding putting in applications blindly at different lenders and taking a hit on your credit to do so. At Independent Home Finance, Inc, we are always working to find solutions and new loan programs for our clients. This also means that the lenders we work with tend to better serve our clients with bad credit, or other unique issues that have made it tough to qualify otherwise. If you’ve been denied at other lenders, or feel like there are no solutions, give us a call. We may have a loan program, an option, or at the very least, information that may be useful for you. Our loan officers have decades of experience, helping clients in unique or tricky situations, and we are happy to be there for any questions you may have. Serving our clients is our top priority, and we will work hard to help find a solution for your specific needs.