How to Obtain A Bad Credit Second Mortgage
Posted on November 13, 2009
Filed Under Unemployment Will Cause The Most Foreclosures In 2009! |
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 now looking much closer at credit scores before they make a decision on who qualifies and who doesn’t qualify for a loan. So be aware it’s possible to get a loan with bad credit, but it’s not easy. The following explains 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 amount that lenders can loan on a second mortgage usually does not exceed the amount of equity the owner has in the home.
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. You usually have the option of taking out a second mortgage with the original mortgage lender or with a totally 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 bed credit mortgage lenders look at the most recent two to three years of one’s credit report to make a decision. How you have been making your payments and your income to debt ratio are the two most critical factors that determine who can get a bad credit second mortgage.
How you would like to use the money if the loan is approved is another important consideration. 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.
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.
Being upfront with the loan officer about your current situation and indebtedness is the best thing you can do. Including all of your income in the figures to calculate your debt to income ratio is also important. The bank does not want to loan money that will not be repaid, forcing them to foreclose. So it’s up to you to show exactly why the money is needed and how you plan to use it.
Bad credit second mortgages (called 2e hypotheek in Dutch) 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.
Comments
Leave a Reply