Help Need $25k HELOC or Line of Credit for a New Roof

[zdsquared]

Hi All,

 

So my credit had been worse and for the last few months I've been trying to bring it up because I desperately need a new roof on my home. it was 450-500 now up to 600-610. Is there any lender who would take that type of score on a HELOC or Personal Line of Credit so I can do my Roof. My insurance will drop me if I don't do the roof and that causes all kinds of problems.

 

Thanks in advance for recommendations.

[hdporter]

2 hours ago, zdsquared said:

Hi All,

 

So my credit had been worse and for the last few months I've been trying to bring it up because I desperately need a new roof on my home. it was 450-500 now up to 600-610. Is there any lender who would take that type of score on a HELOC or Personal Line of Credit so I can do my Roof. My insurance will drop me if I don't do the roof and that causes all kinds of problems.

 

 

I'm coming at this strictly from the perspective of an informed layperson (I have no professional experience with mortgage lending, beyond obtaining loans for my own personal needs) ...

 

First, I would suggest that you concentrate your financing search to Home Equity Loans (term loans of typically 5-30 years in length).  Because HEL's are closed end loans (funds are only disbursed at closing), a lender would likely consider the loan to be less risky than a HELOC.  Further, while we might hope that interest rates will be coming down from current levels, in your shoes I'd want to protect myself from the risk rates might rise dramatically during your repayment; HELOC's typically are variable rate loans, HEL's are more often fixed rate loans.

 

Ideally, over the next year or two rates will decline and your credit will improve.  That would be an ideal opportunity to refinance to cut your interest cost (strive for a HEL that doesn't charge a prepayment fee if you refinance).

 

Second, you don't cite your credit score source.  Most HEL/HELOC lenders will base approval on your FICO "mortgage" scores (these are FICO Scores 2/4/5, where the number denotes the CRA file on which the score is based).  A limited number may use standard FICO 8 scores.  You can purchase and/or track these scores at myFICO.com.  These scores may differ substantially from the score you cite.

 

A 620 FICO tends to be the bottom score considered for most mortgage lending.  When it comes to HEL/HELOC lending, some lenders have a base threshold of 680.

 

Third, be advised that while many equity lenders will cap lending against real estate (mortgage + equity loan) to 80% of the property value, some may limit to just 60% (particularly at scores below 720).

 

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If you're willing to dedicate a decent amount of time to the task, and have a high threshold for frustration, your best bet is to beat the bushes to make inquiries with reputable lenders.  The internet is your friend here (just be wary of any lender that doesn't have a thoroughly vetted reputation).

 

If you'd prefer to let a professional beat the bushes for you, you might consult a mortgage broker in your area (again, I suggest seeking one with a strong reputation, whether through friends, are reliable recommendations on the internet).  A mortgage broker is well connected with viable lenders and is versed on which lender is likely to be of greatest assistance, at the most favorable rates.  Typically, their services will add a one time fee of about 2%-3% that will be added to your loan at closing.  When you amortize that fee over the term of the loan, the ease they can bring to the process can readily justify the cost.

 

Some will advise avoiding brokers in all cases; suggesting they add little to the process.  Where there are lenders at the ready to accept your loan application, that's typically true.  But in a case like yours, a broker can be a godsend.  Best bet is to feel out a few lenders on your own and, if you feel a strong headwind is blowing against you, seek out a broker.

 

 

 

 

 

 

 

 

Edited May 24 by hdporter