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How to Get a Personal Loan with No Proof of Income

How to Get a Personal Loan with No Proof of Income

You need a loan because you need money. You apply for the loan and the bank says that they can't approve you because you can't show that you're earning money.

September 20, 2019
September 1, 2019

Are Home Equity Loans Fixed-Rate or Variable-Rate?

If you’ve been in your home for a while, you have the option tap into the equity. Imagine having the cash you need to make home repairs, pay down debt, or take that vacation you’ve been dreaming about. If that sounds good to you, a home equity loan might be just what you need.

If you're wondering, "Are home equity loans rates fixed?" the answer is yes. However, variable rates are available if you pursue a home equity line of credit (HELOC). 

Although a HELOC is like a home equity loan, the structure more closely resembles a credit card rather than a mortgage.

What Is a Fixed-Rate Home Equity Loan?

A home equity loan is similar to a mortgage in that it gives you a lump sum of cash. You borrow against the value, known as equity, you’ve built up in your house.

To get an idea of how much equity your home has, add up the amount you still owe on your mortgage and subtract that from your home’s value. The difference between what your house is worth and how much you owe is equity.

Most banks let you borrow up to 80% or more of the equity of your home with a fixed interest rate, although the actual value depends on your creditworthiness. 

Once you're approved, the lender gives you a set payment schedule. Your repayment term can range from five to 20 years, and the monthly amount can vary according to your interest rate.

About Fixed-Rate Home Equity Loans

Home equity loans are an excellent way to cover major repairs. If you're thinking of finishing a basement, remodeling a bathroom, or updating kitchen cabinets and appliances, a home equity loan might be for you. If credit card debt is a concern for you, a home equity loan can provide the cash you need to consolidate the high-interest credit card debt. The lower interest rate of a home equity loan can free up more cash each month and help you pay off your debt faster.

The best home equity loans offer fixed-rate access to cash with lower interest than a personal loan. Before you apply, be mindful of minimum loan requirements and high closing costs, and check to see that your credit score is at least 620. 

Even though the fixed payment schedule means paying back the loan is predictable, it’s still a debt that you must repay. The loan requires you to pay interest in addition to the monthly payments until you pay back the amount you borrowed in full. And if you can’t make the payments, you risk losing your home to foreclosure.

A home equity loan might be for you if you want:

  • Easy access to cash when needed
  • A lower interest rate than personal loans
  • Predictable fixed-rate payments
  • The ability to borrow large sums of cash

Home equity loans do come with a certain amount of risk, like all loans. When taking out a home equity loan, bear in mind that:

  • You could face foreclosure for failing to make payments
  • Closing costs can be expensive
  • Some have minimum loan requirements
  • You need a credit score of 620 or higher

About Variable-Rate Home Equity Loans

If you’re looking for a variable-rate loan, a home equity loan won’t cut it. Here, you might want to consider a home equity line of credit (HELOC) instead. A HELOC provides the ultimate in flexibility because the line of credit works like a credit card. After you cash out what you need for your home improvement project, debt consolidation, or college tuition, you repay the amount, and then you can borrow from it again.

Lenders tend to discount the interest you pay for the first six to 12 months. Cashing in on this super-low rate is an excellent bargain if you plan to repay the money you borrow within that time.

If your goal is a short-term withdrawal, such as the cash for a simple room remodel, taking advantage of the introductory interest rate could get you access to a low-cost loan. After the discount rate expires, though, you transition to a regular variable interest rate. Over the life of the loan, variable interest rates are unpredictable and can swing high or low without warning. For this reason, HELOC payments are hard to budget for from month to month.

Just like with a home equity loan, you’ll pay closing costs for a HELOC. Also, make sure you understand the terms of the loan since you could also pay annual fees or a transaction fee each time you make a withdrawal.

If you’re struggling to make the payments on time, your lender could freeze your line of credit, making it impossible to access. Plus, with your home as collateral for a HELOC, you risk losing your house if you’re unable to repay.

A HELOC might be for you if you're looking for:

  • A discounted introductory interest rate
  • More flexibility than a home equity loan
  • Cash you can borrow in increments or a lump sum
  • Payments due only after you make a withdrawal

What to watch out for before taking out a HELOC:

  • Unpredictable payments
  • Expensive closing costs
  • Possible annual fees and transaction fees
  • Could face foreclosure for failing to make payments

Fixed-Rate vs. Variable-Rate Home Equity Loans: Which Is Better? 

Using your home as collateral is a fantastic way to pay for big-ticket projects. If you’re considering a home improvement project or room remodel, want to consolidate high-interest debt, or need help covering the skyrocketing costs of college tuition, a fixed-interest home equity loan or variable-rate HELOC could get the job done.

But if your credit isn’t the greatest or if you’re struggling to make your mortgage payments, the Sell and Stay option from EasyKnock can help you get back on your feet.

And what if you want to sell your house?

Since selling isn’t an option when you have a home equity loan, taking one out could leave you stuck.

Luckily, there’s a solution. EasyKnock’s MoveAbility program is perfect if you need to tap into your home equity to help pay for your next house or want to use the cash to renovate your house before putting it on the market.

Learn More