How Hard Is it to Get a Home Equity Loan?


Using a home-equity loan can be an easy way to consolidate debt, improve your home or make a big purchase. While you might be interested in using a home-equity loan, getting the loan may be more difficult than you had imagined. You have to meet the standards set forth by your lender before you can gain access to the money.

Home Value

When you are trying to get a home-equity loan, one of the areas that comes in to play is the value of your home. The lender will have the home appraised. The value of the house has to fit within the lending standards of your lender. Appraisals tend to be very conservative because property values could fall in the future. This can make it difficult to get access to all the money that you want to borrow.

Income Verification

Your lender needs to verify that you make a certain amount of money. The amount of income that you have to verify will be in relation to the amount of money you want to borrow. You verify your income through tax returns and pay stubs from your employer. Plan on providing at least two years worth of tax returns to the lender.

Credit History

Another part of getting approved for a home-equity loan is having a decent credit score. Each lender has different credit score requirements. If you have a high credit score, you have a better chance of getting approved for a loan. If you have a lower credit score, you will also have to pay a higher interest rate.

Shopping Around

When you are having trouble getting a home-equity loan, you may need to shop around. Just because one lender tells you that it does not want to do business with you, does not mean another lender won't. You may find a loan product that will work for you with a different lender.

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