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Bad Credit Mortgage Options: Why Consider a Second Mortgage?
By Karen LawsonMortgage Credit Problems Columnist
Homeowners with bad
credit can feel helpless when they've been repeatedly declined for mortgage
loans. What if a homeowner wants cash out to pay off bills, but doesn’t want to
refinance a first mortgage? A second mortgage may provide the funds needed.
Lenders can often work with homeowners who have bad credit and ultimately
assist in improving credit scores by providing funds for debt consolidation at
lower interest rates.
Credit Scores: How
Low is Low?
Some lenders will provide bad credit loans to homeowners with
FICO scores of approximately 550. Low credit scores typically require strong
indicators of financial stability including steady employment and a certain
amount of home equity. A recent history of timely mortgage payments is also
important. Each application is considered on its own merit, but lenders may use
standard guidelines for making bad credit mortgage loans.
A Bad Credit Second Mortgage
Can Help Consolidate Debt
Getting a second mortgage loan may be easier as loan amounts
are typically much less than the amount of a first mortgage. It's important to
consider reasons for wanting a second mortgage. If there is a prior history of bad
credit and bills are getting out of control, a second mortgage can provide cash
to pay off high interest rate debt. Any
money saved after consolidating consumer debt should be directed to paying off
the second mortgage. Going on a shopping spree with the savings doesn't help
liquidate debt! It's important to understand how bad credit happens.
Homeowners who have problems with impulsive spending
encounter problems again and again. A reputable
non-profit consumer credit counseling agency can help determine how to manage
and eliminate debt, and can help big spenders address the causes of
irresponsible spending.
About the Author
Karen Lawson is a
freelance writer with more than 15 years of experience in mortgage banking. She
holds BA and MA degrees in English from the
About the Author
Karen Lawson is a freelance writer with more than fifteen years of experience in mortgage banking. She holds an MA degree in English from the University of Nevada, Reno.
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