A home equity loan, which also goes by its other name: term loan, is a lump sum which is paid over a pre-determined period of time using fixed monthly payments and rates of interest. Debt management program (DMP), on the other hand can be defined as a program which is used for the purpose of obtaining better control over the debts belonging to an individual. A lot of times people are interested in obtaining a home equity loan and debt management program but they do not really know whether it is possible to obtain these two simultaneously or not.
It is definitely possible to have these two at the same time but it is believed that opting for a home equity loan while on a debt management program is not favorable. This is because the DMP would decrease the chances of approval of the application for a home equity loan substantially since a lot of lenders are under the impression that a debt consolidation or management programis very much similar to bankruptcy chapter 13. Hence they generally do not like seeing the presence of a DMP on the credit reports of their applicants.
However, this definitely does not mean that you cannot apply for a home equity loan if you are on some kind of debt management program. There are certain techniques of having these two together without any problem. First of all, if you are just contemplating about the idea of having a DMP then you should apply for the home equity loan as quickly as possible, even before the DMP shows up on one’s credit report. This way the lender will be approving your loan application without being aware of the fact that you are on your way of getting a debt management program. Another possibility would be to apply for the home equity loan under the name of the spouse who had not taken up any program for managing his/her debts.