No income equates to no ability to repay the home equity loan. You will be hard-pressed to get a home equity loan with no income at all. To get a home equity loan, you'll need to prove you have enough income coming in each month to pay all of your existing debts, plus the new debt you'll be taking on with this loan. If you face unemployment but have other sources of revenue, you may have a fighting chance. With absolutely no money coming in, you'll need a co-signer for your application -- but even that may not be enough to get an approval. You also need a convincing strategy on how you intend to pay off the loan off with no income.
With equity in your home, a home equity loan could ease the burden of paying the bills if you lose your job. Lenders consider a loan a gamble. They are betting on your ability to repay and your likelihood of doing so. If you have documentation of unemployment income, rental income or other streams of revenue, you may be able to get a home equity loan.
A co-signer is a third party who qualifies you for a loan based on his income and credit history. He signs your loan paperwork, guaranteeing payment for the lender in the event you default. In some cases, a co-signer may get you an approval where all you see is a denial. It depends on the lender you choose and its underwriting guidelines. Other factors could work in your favor, depending on your financial situation.
When a lender uses equity for the loan, a lien is placed on the property that provides security for a home equity loan. The lender may be more lenient if the property has no other liens. You also may receive a better reception if you have a large amount of equity in the property.
When you have no income, your application must be otherwise pristine. Your credit history should shine, with a high credit score, no late payments or collections, and a low debt-to-income ratio. Without a flawless credit history, you are not going to sway a lender to approve a home equity loan.
Equity in your home is a tempting place to get some cash to fund your hardship. Consider the side effects of doing so. The lender will foreclose on the property if you cannot pay the bill, leaving you without a home.
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