Home Equity Loans with Bad Credit: Easy Qualification for Much-Needed Cash

Financial difficulties are easy to get into and quite hard to get out of. Sourcing a large sum of cash can be the answer to all the problems, but when bad credit is a factor that can be tricky. Often, the best solution is actually closer to home, thanks to the availability of home equity loans, with bad credit even a factor.The fact is that bad credit home equity loans can secure the funds needed to get a family out of financial strife. Mounting credit card debts can be cleared, a personal loan can be paid up in full, and a host of outstanding utility bills can be dealt with.The result is a lower debt that is easier to manage, improved credit scores after clearing debts, and less headache. And because loans approved based on home equity are secured loans, they are much easier to get.What is Home Equity?The whole issue of home equity might seem a little confusing but in fact it is quite simple. In short, home equity refers to the share of a home that is fully owned by the resident. So, a home equity loan with bad credit is secured against the value of the home that is free from the mortgage.The rest of the home is owned by the mortgage lender, but as repayments on an existing mortgage are made, the share of equity increases - and along with it, the potential size of the bad credit home equity loan. For example, a home purchased for $200,000 a decade ago may have seen repayments reduce the remaining loan to perhaps $120,000. That means that $80,000 in equity is owned by the borrower.The equity can also be increased by the fact that property increases in value over time anyway. The home might have been bought for $200,000, but it could be worth $300,000 now. So, a loan approved based on home equity could be as large as $180,000.  Easy QualificationUnlike some other loans, the task of qualifying for a home equity loan with bad credit is very easy. This is because the loan is not actually dependent on income, but on the available equity on the home. In essence, this is like collateral, and any failure to meet repayments can result in the lender owning a share of the home.Achieving qualification so easily is all fine, but the compromise that must be made is the high rate of interest that bad credit home equity loans tend to have. This is simply down to the fact that bad credit ratings are a factor in the deal, and the lender reflects the increase in risk that the particular credit score suggests.As much as high interest is not desirable, the fact remains that access to the funds needed is the key consideration, and by shopping around for deals on loans approved based on home equity, it is possible to get competitive rates at least.Negotiate A Good DealWhile a home equity loan with bad credit will come at a price, there is no reason why a good deal cannot be found. This is one of the advantages of going through a sub prime lender, who has expertise in these areas and a deep knowledge of where to locate the best possible terms.Normally, these lenders work closely with applicants to find the most workable bad credit home equity loan out there, taking into account their debts and how the existing mortgage repayments effect them. Traditional lenders offering loans approved based on home equity are usually very stringent with their loan packages.Sub prime lenders are more flexible, but have an ability to negotiate the best home equity loan with bad credit that an applicant can hope for given their specific financial situation.