Ways To Get Approved For A Home Equity Loan

Ways To Get Approved For A Home Equity Loan

Author: Scott Jangro

Getting a home equity loan is easier than ever before. However, as with any loan, there are certain steps that every borrower must take in order to ensure loan approval. While having equity in your home is necessary to get approved for a home equity loan, it is not all that is required.

Make Sure You Have Enough Equity Seems simple enough, but if you haven’t built up enough equity in your home, you won’t be approved for a home equity loan. If you made a large down payment at the time you purchased your home, this probably won’t be an issue. However, if you made a smaller (or no) down payment on your home, take time to see what prices similar homes in your neighborhood are fetching. This will give you a general idea as to whether or not to even begin the loan process.

Check Your Credit Don’t wait until your lender checks your credit to head off any questionable items on your report. Is your credit score less than perfect? Take time to pay off questionable items and to challenge any erroneous items found on your report. Doing so will not only help you get approved for a home equity loan, but will ensure a more competitive interest rate.

Take Your Time If your credit report required a little maintenance—and you have the luxury—take your time before applying for a home equity loan. The more time you can put between any negative marks and your loan application, the better. In addition, take this time to pay down other debts (if possible) to improve your chances for approval.

Stay Current Even if you find yourself in a financial bind, try to stay current on your bills. Are you planning on using your home equity loan to fend off financial disaster? If you can’t stay current on your bills until your home equity loan is approved, call your lenders before you are late, and set up payment arrangements until your loan is approved.

Be Prepared Like all loans, home equity loans require a large amount of paperwork. Payment stubs, W-2’s, and tax returns are some basic documents you should have handy in order to ensure that your loan is processed—and approved—as quickly and painlessly as possible.

Scott Chiaradonna is a mortgage broker from Cape Cod, MA. Scott is a private consultant for AskMrMortgages.com where he shares his extensive knowledge of the ins and outs of the mortgage industry through online articles and via the AskMrMortgages blog.

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