Getting A Bad Credit Second Mortgage
We all know banks are not loaning money as easily as they use to when a loan is applied for. The fact is they are looking very closely at people’s credit scores to make decisions about who does and does not qualify for a loan. It is possible to get loans with bad credit, but not easy. Here is a look at how to get a bad credit second mortgage.
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. The capital lenders are able to loan on a second mortgage typically is not beyond the amount of home equity the owner has at that time.
Unlike a home equity credit line, the second mortgage is a one time loan with a regular scheduled payment amount that is due each month. Second mortgages can be taken with the same lender as the original mortgage or with a different lender. 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 of the bad credit mortgage lenders will look at the most recent two to three years of your credit report before they make a decision. The two most vital factors that determine who can obtain a bad credit second mortgage are whether they make payments on time, and the income to debt ratio.
The other serious factor taken into consideration will be how you intend to use the money if the loan ends up being approved. Paying off higher interest debts and consolidating your position to make payments easier to handle is more likely to get approval for a bed credit loan than other projects or plans.
When applying for a bad credit second mortgage, it is important to have some information for the loan officer in hand before walking into his office. A copy of your credit report, along with any discrepancies noted and how you plan to alleviate them (in writing) is a good idea. If there are no errors, a statement of how you are working to make improvements to your credit score should accompany 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. Banks want to avoid lending money that won’t be paid back, because then they would have to foreclose. Therefore, it is important to show exactly why the money is needed and how it will be used.
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. If you combine several high interest rate debts into a single lower interest rate loan, without having to refinance your original mortgage, you can improve those scores quickly and legally.
Jill writes about subjects like bad credit second mortgage and bad credit second mortgage on her blog.
Tags: bad credit, bad credit second mortgage, Credit, Finance, mortgage, second mortgage
Posted in Finance
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