Facing a natural disaster such as a hurricane, fire, or damaging windstorm is scary and unsettling. Getting through it is one thing, but dealing with the devastating aftermath is another. If your home and property have taken a major hit, you will likely need help to rebuild your life and get back on track. A home equity loan may be a good option, even if you have less-than-perfect credit. Here is how a home equity loan can help restore your property after a natural disaster.
What Does a Home Equity Loan Offer?
A home equity loan uses the amount of equity your home has built up over time. If you’ve lived there for several years and have been paying down the principal, you are building equity. In addition, past property improvements and a healthy real estate market can also affect the home’s resale value.
Other than an initial application to determine eligibility, a home appraisal must be done. This determines what your property is worth. Most lenders offer home equity loans of around 80% of the loan-to-value of your home’s appraised value.
You can access your investment by taking out a home equity loan. Tapping into these funds is possible after the loan is approved, allowing you to begin home and property restoration on your terms.
Qualifying for a Home Equity Loan
If your credit history is dire, don’t let that deter you from applying. There are several qualifiers that lenders consider with bad credit loans during the pre-approval and underwriting process. One of them is the appraised value of your property.
Your credit score will be evaluated, but you will be able to leverage qualifying with a high equity value from the appraisal. A good employment history and steady monthly income can also be helpful in getting approved.
Major Advantages
In addition to getting a lump sum of cash at closing, some other benefits to obtaining a home equity loan include:
- Possible Tax Benefits: Your home equity loan may qualify for a portion of the interest to be tax
- Boost Home Value: Rebuilding your home enhances the appraised value and can build even more equity over time.
- Quick Access to Cash: Most home equity loans for bad credit allow you to quickly access cash without waiting for an insurance adjuster.
- No Restrictions on Cash Use: Most loans are accessible shortly after closing. This prevents waiting on escrow account restrictions.
Improves Your Credit Score Long Term
Taking out another loan against your home may sound risky, but it is a positive step in improving your financial lifestyle. Even with an existing low credit score and taking on additional debt, making strides to pay off old debt while making consistent monthly payments helps build up credit. Personal loans for bad credit are just a stepping stone to revamping your credit history and boosting future buying power.
The goal of taking out a home equity loan is to start rebuilding your home and credit. Don’t let a low credit score stop you from applying. Get the loan you deserve and start looking toward a brighter future.
