Home Equity Loan

[ChrisH261878]

Just a quick question regarding a HELOC.   Homes in my area are going crazy and I've built a fairly significant amount of equity.  Problem is I have a good amount of debt, terrible credit, and a $100K lien on my property after my 1st mortgage.  Is it even possible that I could get a HELOC and pay down/off my debt and the 2nd lien in place?  Then I could move ahead. I have a good job with steady income. 

[nctarheel]

Of course, if your other options are not available as @GailL1 believes they may not be, why not consider selling the house, pay off the lien, pay off the debts, pay off the 1st mortgage, and begin anew by renting somewhere. And improve your credit over time.

I say that for this reason.....

You have a good amount of debt.....

You did something that generated a $100,000 lien on your property.....

You have terrible credit......

All the HELOC would do, if you could get one, is generate more debt with the house as your collateral.

Based on your history, I would think the house would then be in jeopardy.

[ChrisH261878]

I appreciate it.  The $100K lien came from my business having to close due to the pandemic. I've always managed business and debt responsibly but the pandemic at its earliest stage just devastated my business which was our livelihood. I had loans which incurred the debt.Bankruptcy is not an option as I'm working hard and getting back on my feet. I pay my mortgage always on time.    Rents in my area are more than my mortgage for much smaller properties so I'll continue to stay in my house which I love.  I'll get the debts resolved eventually and I know in time my score will improve.  I just thought a heloc would be a shortcut to improving my credit by paying off debts.    I understand that's not an option so I'll just have to keep plugging along.  Thanks!

[GailL1]

Sounds a bit doubtful but it all depends on

(1) Your Credit Score

(2) Your Income

(3) ALL Your Debts, including the amount of your remaining mortage

(4) the value of your home as determined by an appraiser

But that lien for $100K on the property may sink you.

Even if you were to get approved for a HELOC - the amount of the approval maybe as low as 70% of the home value less what you owe on it including the lien.  Plus, from what you have said here, you probably wouldn't get a great interest rate either.  

Only you know the numbers.

[ChrisH261878]

Thank you. Good points.