How to Obtain a Bad Credit Second Mortgage

admin — Fri, 29 Jan 2010 17:50:07 +0000

We all know banks are not loaning money as easily as they used to when a loan is applied for. The fact is they are now looking much closer at credit scores before they make a decision on who qualifies and who doesn’t qualify for a loan. It is possible to get loans with bad credit, but not easy. Here are some possible ways of getting a bad credit second mortgage loan.

If your credit is not excellent, and you would like to improve it, a second mortgage gives you the option to consolidate your credit card debts and other payments you might have into a single loan, with a single payment each month, and you won’t have to refinance your original mortgage. Be aware the amount a lender can give on a second mortgage will not usually exceed the amount of equity you might have in your home.

Contrary to home equity credit lines, the second mortgage is a loan you get only once, and it has a regulated payment amount you need to make monthly. You can use the same lender as the original mortgage to get the second, or opt to try a different one. How easy it is to get money and how much money can be loaned are dependent upon the amount of equity in the home the owner has and his her credit report.

Most bed credit mortgage lenders look at the most recent two to three years of one’s credit report to make a decision. Whether you have been making your payments on time, and your income to debt ratio is in line are two major factors that determine who will have a chance for a bad credit second mortgage.

Another serious factor that is considered is what you intend to do with the money if the loan is approved. If your intention is to pay off high interest debts and consolidate things to make payments easier to handle, rather than invest in other projects or plans, your chances for approval of a bad credit loan go up.

It’s imperative to have collected some information to give the loan officer prior to your consultation when applying for a bad credit second mortgage. A copy of your credit report and any discrepancies noted with how you are trying to alleviate these in writing is helpful. If there are no errors on the report, a statement of how you are making improvements to your credit score should be attached to the loan application.

The best thing to do is be totally upfront with your loan officer about any indebtedness and your current situation. It’s also necessary to include your total income in the figures in order to figure out your debt to income ratio. The bank does not want to loan money that will not be repaid, forcing them to foreclose. As a result, it’s necessary to explain why you require money, and how you intend on using it.

Bad credit second mortgages aren’t easy to come by, but they can be the best option you have to improve your credit score in these tough times. You can improve these scores legally and quickly by putting numerous high interest rates together into just one lower interest rate loan without refinancing your original mortgage.

By: Paul Van Rode

The Facts About Second Mortgages

admin — Sun, 03 Jan 2010 03:21:05 +0000

Your home: It’s probably your biggest asset. Having a home to back you up when you need a loan is one of the greatest advantages of home ownership. In recent years, there has been a major increase in the amount of people looking to use their homes as a way to get access to extra money when they need it most. One of the best ways to do this is through a second mortgage.

A second mortgage is exactly what it says it is – a loan made in addition to your first mortgage, and it’s based on the amount of equity you have built into your home. Many people use them to fund home renovations, to pay off credit cards, or to put a child through college. Since you’ve already been through the process once, the underwriting required to get a second mortgage is much simpler than it was the first time around, and the cost of the transactions involved will be significantly lower. This usually makes up for the fact that interest rates on the second mortgage are a bit higher than they were on the first one.

On a second mortgage, you will borrow a fixed sum of money against your home equity, and pay it back over a specified amount of time. The amount you borrow will be combined with the amount you still owe on your first mortgage.

It all sounds pretty simple. There are just a few things to keep in mind. First of all, don’t take out a second mortgage on your home unless you’ve built up a fair amount of equity in the property already- that is, made payments on the original mortgage balance for a good amount of time. You may still be able to get a second mortgage if you don’t have much equity, but your rates will be so much higher, and the amount you can borrow so much lower, that it will essentially be a waste of your time and money. This is one of those things that is worth waiting for.

Also, look into the other options of borrowing against the equity of your home, including a home equity loan and a home equity line of credit. All of these options allow you to borrow against your equity, but there are slight variations among them that mean one of the three may be the best option for you. It will depend, for the most part, on your particular financial standing, the amount of money you need to borrow, and the amount of home equity you currently have.

By: Joseph Kenny

Mortgage second » Original Mortgage

How to Obtain a Bad Credit Second Mortgage

The Facts About Second Mortgages