Tips on shopping for a home equity loan
Plummeting home values and tougher lending standards make getting a home equity loan tougher than in the past. But it isn't a lost cause if you improve your credit score and shop around cautiously.
Qualifying for a home equity loan and getting the best rate depend on several factors, including your home's current value and your credit score. The better your credit score, the better your chance of getting a home equity loan.
To improve your credit score, avoid making late payments, pay off your credit cards and be patient. The longer you can prove you are a responsible borrower, the more faith the lender will have in you.
Don't forget to check periodically to make sure everything on your credit report is accurate. Under the Fair Credit Reporting Act, you have the right to dispute any inaccuracies on your credit report.
Keep tryingDon't just assume that because one bank turned you down, you're out of luck. Try several banks. Many community banks, credit unions, and savings and loan associations also have cash and want to lend.
When looking for a home equity loan, be mindful of high-cost lenders or what the Federal Deposit Insurance Corp. calls "predatory lenders." If the offer is unsolicited or seems too good to be true, chances are it's not true.
Before signing a home equity loan, contact multiple lenders and rely on recommendations from family and friends. Comparison shopping is one of the best methods of protecting yourself when shopping for a home equity loan.
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