Will I be able to get a home equity loan if I am currently in a forebearance agreement with my mortgage?

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We will be listed as “entering foreclosure” until September, but have already made 5 consecutive payments into the forebearance plan, including a large down payment. However, in order to get our finances in order and pay education costs, we need to take out a home equity loan. Will lenders approve the loan (if we have one great credit score, one bad, and a good income) in our current state? Or would it be rejected outright?

  1. Reply
    February 3, 2011 at 9:42 am

    Go in and ask. Some lenders look at the score. PERIOD.

    Others actually look at you report and situation. Some will give anybody a loan but the rate varies with the score and report contents, others only want really good histories. Places like Beneficial Finance tend to be easier and more expensive. Places like banks tend to be pickier.

  2. Reply
    Bethy B
    February 3, 2011 at 10:40 am

    it will most likely be rejected because your credit has taken a recent hit. It will take a very special finance company to do that.

  3. Reply
    February 3, 2011 at 11:39 am


  4. Reply
    February 3, 2011 at 11:51 am

    Some lenders will look at it, provided you have excellent documentation. The interest rates will be exceptionally high, though, since the senior mortgage is in such a ‘dangerous’ situation. The reason is, if the new loan causes problems with your ability to pay on the forebearance plan, the new loan will be worthless.

    You might find it is actually cheaper to do a personal loan.

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