Have a bad credit score and need a loan? Faced lots of rejection from banks and other lenders? You may want to consolidate debt, pay off your credit bills or simply complete home renovations – second mortgage is always an excellent option You can consolidate your debt with a second mortgage and hence eliminate your credit card bills and thereby make improvement on your credit rating.
Banks often put great emphasis on your credit score to determine whether or not to pass your loan. If the credit score is below 650, you must be well aware that you’d have great trouble in procuring a loan. Thus, using the second mortgage option would hence clean up your credit report and make significant improvement in our chances of getting the loan. It can be seen as a stepping stone to your loan. You use second mortgage and then rebuild the credit, then refinance the first as well as second mortgages into one new low rate first mortgage linked to an institutional lender such as a bank.
To find a second mortgage bad credit loan may be difficult since it is hard to find a lender ready to take the risky position. You must hence contact an experiences mortgage broker to receive professional advice and service in order to be confident that you have a solid plan. They will get you best rates from second mortgage lenders with minimal terms and a long time to repay your debts.
Second mortgage lenders will also not consider your credit score much. They will however still want to be sure of the security of the loan and may some or all of second mortgage proceeds to be used to payoff other high rate debt.
Get a second mortgage to refinance with bad credit
How does second mortgage work? The lender is concerned mostly about the amount of equity in your home since the loan size will be based on it. He will only go as high as 85% of the cost involved. Thus a $300,000 home may get you a second mortgage of only $40,000 if the first mortgage was $200,000 thus making a total of 80% in loan value. You will have to fill an application to start the process along with having an approximate idea of your home’s worth. After the mortgage broker’s advances of procuring you loans, you must review your credit report and also get appraisal on the home by an approved home appraiser as it will be needed by the lender. With the appraisal in hand there will be no major issues besides agreeing with the mortgage agreements after understanding the terms. Your lawyer can thereby finalize the transaction for you and you can procure the released funds.
The process gets easier through a broker due to help in paper work and also their contacts with the mortgage lenders.
Can you refinance a second mortgage?
It is also possible that you refinance your second mortgage once the credit is better. Second mortgages are often of short terms of only 2 years and it is better to refinance that renew. However, be sure that you calculate the costs or penalties involved and be willing to bear them alongside the legal cost and that of appraisals. However, refinancing is better wince most second mortgages come at a high rate.