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Bad Credit Second Mortgages
Many business owners fall on hard times at one point or another
in their business career, or even prior to owning a business.
Instances like this may occur due to medical bills or because of
smaller bills that have become difficult to pay on time, or even
pay at all. Whatever the reason, credit scores are affected by
hard times and the inability to pay bills on time.
A good way to recover is to consider a bad credit second
mortgage loan. Home ownership and home equity are required in
order to qualify for a bad credit second mortgage. If you
haven't borrowed any money against the home for several years,
you probably have enough equity to qualify for a bad credit
second mortgage loan. While the process for getting a bad credit
second mortgage loan may be difficult, the payoffs can be
extremely advantageous.
Advantages of a Bad Credit Second Mortgage Loan
- A bad credit second mortgage loan can offer lower interest
rates on high interest bills. If credit card bills are something
you contend with every month, a bad credit second mortgage loan
can offer a lower interest rate. Monthly payments on a bad
credit second mortgage are generally lower than what you'll pay
on high interest bills.
- Financing a bad credit second mortgage loan offers a "break"
from payments. It is generally true that when you finance a bad
credit second mortgage loan, you have a 30-day period of no
payments on the loan. This can be of tremendous assistance,
especially if the loan is used to pay off other bills. Consult
with your lender to verify.
- The interest may be tax deductible. Ask your lender and tax
preparation consultant to verify, but the interest on your bad
credit second mortgage loan may be deductible on federal income
taxes.
Disadvantages of a Bad Credit Second Mortgage Loan
- Interest rates are high. Because the lender will view you as a
high risk, interest rates tend to be higher on bad credit second
mortgage loans than on loans for those with good credit ratings.
If the loan is used to pay off bills, consider the all facts.
For example, the interest on the bad credit second mortgage loan
is lower than high interest credit cards, allowing you to pay
off the amount owed much faster.
- Obtaining a bad credit second mortgage loan can be a time
consuming and exhausting task. Financial institutions are leery
of working with individuals and businesses with bad credit,
thus, obtaining a bad credit second mortgage can be very
difficult.
Bad Credit Second Mortgage Loans: Where To Start
1. Check your credit scores with the three credit reporting
agencies: Equifax, Transunion, and Experian.
While you may be able to obtain your credit report at no charge,
there may be a fee involved to have your credit report mailed to
you. If your scores are above 550, chances are fairly good that
you'll be able to obtain a loan. Individuals with credit scores
that are lower than 550 may have added challenges in finding a
financial institution to approve a bad credit second mortgage
loan.
If your credit scores are below 550, review your credit reports
carefully. Request errors on the reports be removed. Work to
resolve outstanding bills. Bring payments current on existing
bills.
2. If you've continuously worked with a financial institution
over the years, apply with that institution first for your bad
credit second mortgage.
If the bank or financial institution knows you well as a
customer and understands your circumstances, they may approve
your bad credit second mortgage loan.
3. Consider a mortgage broker for obtaining a bad credit second
mortgage loan. A mortgage broker, or mortgage agency, will be
able to review your application and have access to hundreds of
different lenders willing to approve a bad credit second
mortgage loan. A mortgage agency or broker will also be able to
tell you your credit scores, and if they're too low to get a
loan, they will be able to advise you on how to bring the scores
up so that your bad credit second mortgage loan can be approved.
Most importantly, be patient. Lenders need time to consider
high-risk loans. Plan on two to three months or longer to obtain
a bad credit second mortgage loan. Keep the advantages in mind,
and continue to build your credit scores.
About the author:
Rebecca Game is the founder of Digital Women ®, an online
community for women in business. A 30 year entrepreneur and
dedicated to helping other women. Visit her site: Loans for
Women
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