Accessing equity with bad credit

[Eric Edling]

I own my house for about 360k and it’s worth near 1 million. I have found my self in a terrible financial situation. My credit is around 500 and I am behind on my house payment. However, I have started a great new career but it is going to take around 45-60 days before I start getting paid. Is there anyway for me to get even a small amount of equity out of my home? Just a small 10,000 loan would give me some breathing room for the next month or two. 

It was like the perfect storm I lost my job and was in a car accident. It took my insurance company almost a year to fix this vehicle and it’s a 30000 dollar car that I owe like 3,000 dollars on but it’s about to get repossessed. I don’t have any credit card debt but I have several other bills that are like utilities that are getting past due and I am literally flat broke. My electricity, water, phone every is about to get shut off and my car repossessed. In 60 days I will have a good income but I’d rather not lose my car or be without electricity. I’d love to get access to even just a 5-10k in equity from my house I know my credit is terrible but there is 500k in equity and soon I will have a steady income.

[Derek Dombeck]

You certainly can go to a local REIA and seek out someone with cash or a self directed IRA that may either give you a loan in 2nd position or you could sell an Option on your house for the cash you need. If you sell an Option, you would not have debt payments, but they may want to exercise the Option right away, so you meed to think about the language you put in it.

Example. 

I gave an owner $4500 to stop a tax foreclosure on his property in exchage for an Option to purchase it for 18K sometime in the following 10 years. But I could not exercise my Option for the 1st 2 years and they had the right to buy my Option back in that same time period. 

It's been 5 years now and I still hold the Option. The property owner doesn't owe me anything, but within the next 5 years he will have to sell to me or renegotiate with me.