If you have difficulty paying your property taxes or making the necessary repairs to your home, high-pressure salesmen may try to fast-talk you into a bad loan with many unnecessary fees and hidden charges. Don't fall for them
First of all get your CREDIT SCORE and make a realistic assessment of your credit worthiness.
Did you know that the three main credit reporting agencies in the United States are bound by law to provide you with a FREE report of your credit, once a year? But the report is not automatic and you have to ask for it. Here is their contact information:
Equifax: (800) 685-1111, www.equifax.com;
Experian: (888) 397-3742, www.experian.com/consumer; and
TransUnion: (800) 916-8800, www.transunion.com/index.jsp.
Your credit will range between 300 to 850. The higher the score, the better is your credit rating and better terms you can get for your loan.
A credit rating under 500 spells trouble. That's when you will be forced to accept stiff terms by the private mortgage lenders since most banks will try to avoid lenders with credit score that low.
If your credit score is 700 and above, you should be able to get a mortgage loan with acceptable terms.
Should you pay off your credit cards with home equity loan?
The next time your credit lender suggests you take out a home equity loan to pay off your credit card debt, think twice before quickly jumping on the offer.
Why?
Because if your cash flow is limited and you end up defaulting on your credit card debt, a credit card company cannot foreclose your property. But if you cannot pay your home loan, the mortgage company can foreclose your house and take it away from you.
Thus those two different types of debts have very different results if and when disaster strikes. Consider that before taking out a home equity loan.
(This article is written for information purposes only. Before making a financial decision please consult a licensed professional.)
