If you have bad credit, getting a home repair loan may seem like an impossible feat, but there are some options available to you. Bad credit loans can be tricky to get, but with these steps and the right lenders, you can get your home fixed up quickly and easily! Let’s learn how to get a home repair loan with bad credit!
Get Pre-Approved
To be approved for a home-repair loan, you’ll first need to be pre-approved. To do so, submit an application and bank statements that show you can afford your monthly payments. Once your lender approves your application, you’ll have access to all of their available loans and their rates. A lender may not give you favorable rates if you aren’t pre-approved, so apply now!
Compare the Rates
Getting a home-repair loan can be difficult if you have bad credit, but it’s not impossible. First, figure out what kind of mortgage you want. There are two kinds: fixed and adjustable. For example, most 30-year mortgages are fixed and have one interest rate throughout; 15-year adjustable loans don’t offer initial interest rates as low, but they do adjust every five years or so—ideal for homeowners who plan on selling in just 10 years or less. Interest rates also vary according to your credit score and financial history. The lower your score, the higher your interest rate will likely be. Interested in learning more about getting a loan? Check out our guide here. Once you know what type of loan you want, it’s time to start looking at banks that offer those products.
Use Home Equity As Collateral
It’s tempting to think that you need good credit to qualify for a business loan. And while it’s true that many lenders only offer loans on favorable terms—or at all—to borrowers with high FICO scores, there are still financing options available for people who have less-than-perfect scores. For example, you may be able to use your house as collateral for a loan from your local bank. This is typically considered an unsecured personal loan (though some websites may call it something else) and should come with relatively low-interest rates.
Shop Around For the Best Deal
Getting your finances in order is also important. If you have bad credit or no money saved up, it can be difficult (but not impossible) to find a lender willing to give you home-repair loans for bad credit. Shop around and read reviews on several lenders before settling on one. Ask questions about what types of loans they offer and how much interest they charge; more importantly, make sure to ask about any fees that might come up along the way—they’re often added onto an already expensive loan. If possible, borrow from friends or family members; if that’s not an option, many companies let customers put a percentage of their next paycheck toward repayment.
Consider an Alternative Lender
If you have bad credit, conventional lenders may be off-limits. You could try non-traditional options for financing a home improvement project. This approach can provide better rates and less stringent qualification requirements than commercial banks and other financial institutions. Consider Prosper, Lending Club, or Loan base as alternative options when applying for home improvement loans.
Find out if your bank or local credit union offers loans that match your borrowing needs and look into SBA-backed Home Improvement Loans, which offer long repayment terms at low-interest rates. Working with contractors who are also to accept payment over time also helps spread out your costs.