Bad Credit Home Loans
Home loan is a way to borrow money from a lender by securing your house as the repayment. The most common type of home loan is HELOC (Home Equity Line of Credit), which is loan agreement between a lender and a borrow within a specified period of time. The lending term period is generally anywhere from five to twenty five years.
- It’s important to mention that HELOC has variable based interest rate. This means that interest rate can and most likely will change over a period of time. HELOC also offers the cheapest interest rates. Yeah, that’s right HELOC gets you the lowest interest possible.
- The major benefit of HELOC is that if you need it, you can have it. In other words, if you don’t need it you don’t have to use it. The fund availability is renewed automatically as you simply repay the money you use on your credit line without reapplying. So it reduces the fact of applying again and all over again. The monthly interest payment varies from anywyere of 1.5% to 2.5%.
- The other benefit of HELOC is a low interest rate. This is especially helpful for people with bad credit in order to reduce their cost of financing and improving their repayment history. Another benefit is that the interest paid can be used for the tax deduction purposes, if done properly.
- The major disadvantage of HELOC is the temptation to apply for a long-term repayment schedules. Although this keeps the monthly payments low, the purchased items have got life less than the total duration of your HELOC. So you might even end up paying for an item that you don’t use anymore. The other main disadvantage is that if you are not able to manage your expenses properly and are not able to repay the loan, you might be risking your biggest asset - your home!
- Finally, the good news is that HELOC is available for people like you - individuals with bad credit and bad credit history.