It’s not easy as it used to be to get money out of a bank when you’re trying to obtain 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. 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. Lenen shows how the Dutch solve this matter.
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 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.
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. 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.
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.
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 there are no errors, a statement of how you are working to make improvements to your credit score should accompany 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. Banks want to avoid lending money that won’t be paid back, because then they would have 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. 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.