Getting A Second Mortgage Despite Having A Bad Credit Score

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Written by Jill Cullen

Monday, 23 November 2009 08:12

Banks are not turning loose of money the way they used to when someone applies for a loan. 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. Although it's possible to get loans with bad credit, it can be difficult. The following explains how to get a bad credit second mortgage.

by JillCullen

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. Here is a look at how to get a bad credit second mortgage.

If your credit is not so good and you want to take steps to improve it, a second mortgage can help you to consolidate credit card debts and other payments into a single loan with a single monthly payment without having 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.

This is not like a home equity credit line; the second mortgage is just a one time loan that has a scheduled payment amount each month. You can use the same lender as the original mortgage to get the second, or opt to try a different one. The ease of obtaining money and the amount of money that is available is contingent upon the amount of equity the owner has in the home along with their credit score.

The majority of bad credit mortgage lenders investigate the most recent few years of someone's credit report to determine whether or not they will work with them. 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. Eliminating high interets debts and consolidating the rest in order to make paying them simplistic is more helpful in getting a bad credit loan than other plans or projects.

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 and any discrepancies noted with how you are trying to alleviate these in writing is helpful. If no errors exist, bring along a statement of how you intend to improve your credit score with 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 is not going to loan money that can't be repaid, which forces them to foreclose. Therefore, it is important to show exactly why the money is needed and how it will be used.

Bad credit second mortgages are not easy to obtain, but they can be the best option for improving one's credit score in these trying times. Combining several high interest rate debts into a single lower interest rate loan without refinancing your original mortgage can help to improve these scores quickly and legally.

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Jill loves to blog about subjects like second bad credit mortgage and second bad credit mortgage on her blog.

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