There are many reasons homeowners may decide to take out loans to cover expenses. There are also various other types of loans that are available and can offer financial assistance to borrowers who need a financial boost. Some homeowners may feel that home equity loans can help them meet financial obligations. Other homeowners may find it helpful to do some research on the other available options, which may or may not involve accessing home equity. Borrowers who have challenging credit histories may also be wondering if assistance via loans is available to them, as that’s a bit of a grey area.

Purpose of home equity loans

A homeowner may get a home equity loan to access the equity in their home. These loans use the monetary value of the home as collateral. This type of loan functions as a second mortgage that allows the homeowner to borrow against the equity of his, or her, home(s) and receive all or some of the equity based on the property’s value.


The lender generally adjusts the equity on the property after a homeowner takes out the loan. When a borrower gets a HELOC (Home Equity Line of Credit), they may use a portion of the equity instead of using the entire credit line immediately. Interest rates vary widely on HELOC, which means that the monthly payments also vary from owner to owner, depending on circumstances. After a homeowner repays a HELOC, additional funds can be withdrawn from the remaining line of credit.

Sometimes people may take out a home equity loan to work on other aspects of their lives. Some reasons for HELOCs include the following:

  • Business expenses
  • Repaying other personal debts
  • Paying for a college education

When a borrower takes out a home equity line of credit, there are lenders that provide loans with interest-only payments or payments that combine repaying the interest and principle. If an individual cannot make payments when there is a balloon payment at the end of the term, the borrower is liable to default on the loan.

Home Equity Loan and Alternative Lending Sources

Alternatives to Home Equity Loans

If homeowners need a loan for personal reasons, they can consider alternatives to home equity loans. A borrower with a desire to use the equity in a home can consider a nontraditional equity program.


Skydan Equity Program

Individuals who are facing foreclosure can receive help from the Skydan Equity Program. We, at Skydan designed the program for people who have poor credit in the state of Illinois. Some borrowers may choose this program because they have the desire to save their homes, despite needing extra funds. Unlike the traditional home equity loans received from a bank, this particular program can serve people regardless of personal credit scores. Participation in the program requires no credit, or background check. The approval is solely based on the home’s value.


The Skydan Equity Program allows homeowners to bypass the traditional banking system requirements, while still getting access to the funds they need. The program isn’t limited in the same way a HELOC is.


When homeowners need to access the wealth that is in a home, traditional lenders require that they repay home equity loans back with interest, whether that be for repaying a debt, or something else. The interest is paid out to the lender, which is usually the bank.

By participating in a home equity program, on the other hand, homeowners avoid paying interest to the lending institution. The ability to live in the house while repaying other creditors buys homeowners the needed time to step on their feet again, while still maintaining their life at the home.


Homeowners who participate in our program have a lease agreement with Skydan. The home is leased by the homeowner for up to two years. The homeowners can choose to pay rent on their homes at the end of the deferment period. They have the option to pay the rent amount along with the purchase price to Skydan or sell the property and keep the funds they receive that exceed the amount that was determined when the lease was signed.


When a homeowner has a credit score that does not meet the traditional lender’s credit score requirements, the borrower can use the Skydan program instead. Participating in the program helps owners increase their credit score by using funds to repay other debts on time.


Individuals can benefit from getting a home equity loan alternative using the Skydan lease program. During the lease, homeowners can benefit from using the extra time to resolve other financial concerns. This interest-free process helps homeowners get the funding that’s necessary to get a new home loan if homeowners want to stay in the property. The time that the participants spend in the program helps them obtain the new loan and cover the deferred rent payments at the purchase price that was set when the account was established.


Additional HELOC loan alternatives

There are additional loans that a homeowner can consider that do not involve the equity of a home. Some other loan alternatives that borrowers can consider if a home equity loan is not something that’s desired include the following:


Personal loans

Individuals can take out personal loans to take care of their previous debts. There are some personal loans that do not require collateral that can help homeowners pay for expenses such as weddings, education, and consolidating debt. There are some personal loans that have low-interest rates that borrowers can benefit from as well. Other personal loans yet, may have higher interest rates which require much more substantial monthly payments than most borrowers feel inclined to pay.


Credit cards

Using a credit card to repay past dues is another option. If a borrower is eligible, then credit cards can be used to help cover expenses which exceed the available physical funds. When borrowers can’t get low-interest rate credit cards, secured credit cards can be applied for to help re-establish credit. With secure cards, a borrower would need to make a deposit to have collateral for the money loaned through the card. Secure credit cards can transition into unsecured credit cards after payments are made on time for a brief period.


If a homeowner wants to take out a loan to cover their personal expenses, they obviously have options be they home equity loans or other loan options. Some individuals may feel comfortable accessing available home equity. In this case, a HELOC may help cover expenses they feel comfortable using the equity to finance. A homeowner with a lower credit score may participate in the Skydan Home Equity Program to reestablish good credit and remain at home. This program can help an individual recover from financial difficulties and create a strong financial future. Some homeowners may get traditional financing from credit card companies or banks if they qualify for credit cards or personal loans that can address financial concerns. Whatever the route taken is, there’s great value in researching the options and choosing the best one.