Which Home Equity Loan is Best for Me?

A Home Equity Loan is a type of loan that utilizes the borrower’s equity in their home or investment property as collateral. The more equity you have in your property, the easier it is to qualify for this type of loan. With Independent Home Finance, Inc, anyone can qualify for this type of loan as long as they have more than 40% equity in their home regardless of income or credit issues. When searching for the right options to stimulate your small business ventures, it’s important to understand the different types of Home Equity Loans that are available to support you. Through understanding your options, you can better assess your problem and pinpoint the correct solution for your particular needs.

The two main types of Home Equity Loans are; Private Investors and Alternate Investors. They both have different strengths which can provide the best support to different situations and limitations of the lendee.

Private Investors provide the advantage to some clients through the improved benefits that they can typically offer. Individuals have a better chance of being selected as well with this type of Home Equity Loan due to the vast pool of over 1,000 Private Investors available. With this type, the individual is using a mortgage loan that can be used as a primary lien or secondary lien, depending on the positive standing of the current loan. To qualify for this option, one simply needs 35% or more equity in a home or investment property. This option is also preferred if the individual has credit or income issues. This loan also can be utilized against one’s primary residence as long as it’s a secondary lien and for business purposes such as, starting a business, improving a current business, or even investing in another property.

Alternate Investors can have better terms than Private Investors on paper, however, they require documentation of income and a credit score above 550 in order to qualify. This can create a roadblock for some individuals who struggle in these areas yet still need to stimulate their small business. To illustrate proof of income, one can use alternate documentation such as bank statements, renters income, 1099’s, or certified profit and loss. The individual’s credit score greatly affects the loan to value and the actual amount of money that can be borrowed from the Alternate Investor. For example, a credit score of 550 Fico requires 35% equity while a 700 Fico requires only 10% equity. Simply put, the better the credit, the more one can borrow with this type of Home Equity Loan. If you are struggling with credit issues, keep in mind that you need 12 months to have elapsed from any major derogatory item, such as bankruptcy discharged, a notice of default, or late mortgage payments, for your credit to recover.