How to Get The Best Equity Loan

An equity loan is a loan taken against the value of your home. These are also called "home equity loans" or just "equity loans". The purpose of an equity loan is to convert the value of your home into cash. If you can do this, you can spend the value of your home while still living in it. It's not free, of course, and you'll need to make sure that you repay the equity loan or you'll also lose your house. The trick, as it were, is finding the best equity loan.

Instructions

1. Step 1

Get an appraisal of your home. You'll need an appraisal of your home before you can even think about applying for the best equity loan on the market. The easiest way to do this is to call an appraiser and ask for a "comp" on your home. The appraiser will almost always do this for free. A "comp" gives you an estimate of your home's value based on other homes in your area similar to yours. It's not a full appraisal though.

2. Step 2

Check your credit score. Most people skip this step, but this is important. You'll need to check your credit score with the 3 big credit bureaus (Equifax, TransUnion, and Experian). If your credit score falls below 680, you may want to hold off on applying for any type of equity loan. You'll only get the best equity loan with a credit score of 720 or above.

You can try to increase your credit score by taking out small signature loans from your local bank and paying them back. Charging up a credit card and paying it off every month also helps to boost your score. If you're pretty close to the 720 mark, you may be able to ask for what's called a "rapid rescore" from your mortgage broker. This can boost your score anywhere from 30 to 50 or more points.

3. Step 3

Fill out numerous applications for an equity loan. Finding the best equity loan is going to be quite difficult if you only fill out 1 or 2 loan applications. If you find that your "comp" is more than what you currently owe on your home, and you have a credit score of 720 or above, you will have a lot of leeway in what you can qualify for.

Apply with at least 5 mortgage brokers that offer loans from different banks (you don't want the mortgage brokers to all have the same banks in their portfolio).

4. Step 4

Choose the lowest rate. The best equity loan is really the one with the lowest rate and the most flexibility. Avoid prepayment penalties, and any extra fees for carrying the loan. Also, try to find out up front whether your loan will be sold to another bank who may want to raise your rates (equity loans tend to be variable rate loans) after they purchase the loan.

How to Apply for a Small Business Loan

The vast majority of people who decide to go into business for themselves will, at some point, need a small business loan. Obtaining such a loan can be achieved through several different methods, including:

A direct bank loan;
A government guaranteed loan;
A private entity loan.

Whichever method is ultimately explored, certain factors will be taken into consideration and certain steps should be followed.

Factors that will always be taken into consideration, no matter the loan source, include:

The collateral available;
The equity available;
Your credit rating;
Your character;
Your experience in the field as well as in business management; and
The written business plan.

Follow the steps below to prepare your application for a small business loan.

Instructions

How to Apply for a Small Business Loan

Step 1

If you have not already done so, meet with representatives of the SBA or their corresponding Small Business Development Centers (SBDCs). Obtain as much information from them as possible regarding current SBA loan requirements and specifications; SBA loan procedures; SBA loan practices; and any other small business loan information they might have. If they have one, also get a business plan outline.

Step 2

Meet with one or more local banks regarding small business loans. Obtain information about their loan requirements and specifications, application process, loan practices, and any other small business loan information that they might be able to provide.

Step 3

Meet with any local private entities that traditionally make small business loans. Obtain information about their loan requirements and specifications, application process, loan practices, and any other small business loan information that they might be able to provide.

Step 4

Review all of the materials that you have gathered and prioritize them, beginning with the loan that appears to offer your best chance for success. Do not apply for multiple small business loans at the same time. Most entities do not want to be pitted against one another.

Step 5

Starting with the small business loan that you believe has the best chances of successful achievement, make a list of everything required in their loan process.

Step 6

Using the small business plan outline provided by the SBA, bank, or lending entity begin drafting your plan. In most instances, business plans must include information like:

A general description of the business, including the industry under which it falls, the specific type of business, and the trends within both;
An identification of the business's potential market(s);
Information about the business's competition;
A list of the products and/or services the business will provide;
A detailed description of where the business will be located including its address, square footage, internal and external description of the property, and anything else you can provide;
The pricing structure for the business;
A list of marketing strategies to be used for the business;
A detailed list of the business's needs to include capital, equipment, supplies, personnel, and anything else;
A detailing of the financial requirements to get the business up and running as well as to function until it begins making its own profits;
A resume for each potential employee of the business, including yourself;
Projected cash flows for at least the first year of the business's operation;
A projected profit and loss statement for at least the first year of the business's operation;
A balance sheet; and
A break-even analysis.

Step 7

Complete all loan application paperwork required for the specific loan for which you are applying.

Step 8

Obtain at least three letters from individuals who can attest to your character and/or experience in the industry or business management.

Step 9

If an SBA, SBDC, or other loan officer is available, make an appointment for him or her to review your loan paperwork. Make notes of any changes they recommend to the business plan or other information as well as any additional pieces of information they feel important to the application.

Step 10

If changes were recommended by the loan officer reviewing your paper, make them as suggested. Also obtain or prepare any additional information that they suggest should be added to the paperwork.

Step 11

Finalize your business plan and paperwork, making certain that everything required is provided before making an appointment with the loan officer capable of approving your loan.

Step 12

Make an appointment with your approving loan officer. Review your paperwork with him or her, with an eye toward making certain that your paperwork is complete.

Step 13

If necessary, obtain or prepare any additional paperwork required in order for your loan officer to make a loan determination.

Step 14

Make yourself available to your loan officer until such time as he or she can make a loan decision.

Step 15

If your first loan application is denied, move on to the next possible loan and begin the process over again.