How to Find a HELOC Lender

Credit in today’s market is tight thanks to the recent mortgage crisis. There’s no getting around that fact, which means that it’s going to be tougher for borrowers to find a home equity line of credit (HELOC) lender. In the immediate wake of the credit crunch, the issue was a lack of capital to go around. Now, the main issue is a lack of qualified borrowers. That means finding a HELOC lender is largely going to be a matter of improving your borrower profile and approaching the right institutions. Check out some of these quick tips for finding a HELOC lender in today’s mortgage market.

Improve Your Credit Score

The days of 100% LTV mortgage for any old borrower are over. Now, you should have good to excellent credit in order to get a decent HELOC. You’ll also want to have as low a debt-to-income ratio as possible. That means paying down your credit card debt, consolidating loans and, of course, taking care of any negative items on your credit report. The better you can look on paper to a lender, the better your chances of getting a HELOC. Lenders are having to answer to stricter and stricter underwriting guidelines - oftentimes, it just comes down to your numbers.

Approach Smaller Banks

Big banks were the first to clamp down on lending and will be the slowest to open up again to HELOC borrowers. But you may have some luck with smaller banks and credit unions that survived the mortgage crisis. That’s because they likely had sustainable practices and policies in place from the beginning, and thus weren’t heavily affected by the credit fallout. Nor will they be drastically changing the way they do business. Small banks that stayed strong during the tumultuous past years will have a greater awareness of what types of loans and HELOCs they can give and will be able to be more flexible HELOC lenders.

Work with a Mortgage Broker

A mortgage broker’s job is to pair the right borrower with the right lender. They may be able to help you find a HELOC product that fits your needs. They have a wide network of banks and other lending institutions and will know which ones are more likely to extend a HELOC to you. This can save you a lot of time and headache by avoiding a long string of rejections.

HELOC lenders are out there. But finding them will be a bit more difficult, now that the rules of lending have changed. If you have a good credit score and significant equity in your home, you should be able to find a HELOC lender who will extend at least a 80% LTV HELOC to you. Check with smaller banks, mortgage brokers and the bank that holds your first mortgage before giving up hope.