Home equity line of credit with bad credit
You can get a home equity line of credit with bad credit, as long as you have three other qualifying parameters in order. How low can your credit scores go, how much you can borrow and interest rates vary greatly from one bank to the another. Here is are the three qualifiers
- sufficient existent home equity, so Combined Loan to Value (CLTV) with new home equity line of credit doesn't exceed 70%
- sufficient income, so your back debt to income ratio doesn't exceed 38%
- sufficient assets - you need to have minimum 6 months worth of monthly payments to cover all reoccurring monthly expenses on your credit report.
At least that what I was told by two representative, one from Bank of America, second from Chase. Neither rep asked me where I live, which can be quite important, and basically said that I would need to apply on the phone or online, and get a decision one way or the other. Both said that whatever I was being told is very approximate without seeing my exact numbers.
Your middle credit score can be as bad as 600 with Bank of America, as long as the lowest out of three isn't below 580. You can borrow up to 70% of your home equity. If your house value is $200,000 and first mortgage is $100,000, Bank of America extend you line of credit of $40,000 maximum.
Chase has stricter requirements - lowest credit score allowed is 620, and you can borrow only up to 60% combined. Using preceding numbers, it limits your home equity line with bad credit to $20,000.
Few of the clients have recently opened home equity lines with Wells Fargo and National City which was recently bought by PNC Financial Services Group. The middle credit scores were 664 and 672 respectively, and credit lines were such that CLTV were 72% and 68%. Both clients have debt to income ratios under 30% and plenty of cash in savings.
Fri Jan 9, 2009 03:01PM by Tony | More in Mortgage | Comments (0)
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