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Second Mortgage a Good First Step
A second mortgage can be the first step to climbing out of
debt, especially for homeowners who have bad credit. A second
mortgage is a loan taken out in "second position" on a property
that already has a mortgage. There are fixed-rate loans,
adjustable-rate loans and home equity lines of credit (also
known as HELOCs). Fixed-dollar-amount mortgages are the way to
go when you need all the money at once. A HELOC is a credit line
that can be drawn upon as needed up to the limit of the loan.
"Bad Credit" Second Mortgages
Your right to credit is guaranteed by the Equal Credit
Opportunity Act. You can't be denied credit based on race,
gender, marital status or ethnicity. But how much money you can
borrow and how much interest you will be charged will depend on
your credit score.
Credit is easy to get and hard to control. Not using it properly
will get you a low FICO score from the three major credit
bureaus. Generally, a score of 680 or better signifies good
credit. Scores in the 680-620 range are still considered good,
but will cause creditors to take a second look before lending
you money. 620 and lower, and you are in the bad credit range.
Here are some indications that you are in bad credit territory:
- You have to apply for new credit cards to pay off old ones,
thus rotating but not retiring your debt.
- You can only make the minimum payments on your loans and cards
each month.
- You are at the limit on all your cards and accounts.
- You have to get subprime financing when you need to borrow
money.
Improving Your Financial Situation
It's a catch 22 that getting a bad credit second mortgage can
lower your FICO score initially, but it can also help raise it
in the long run--if you use the money to pay off high interest
debts. This new loan doesn't reduce your debt; it just
restructures it to help you get back on your feet financially.
An added bonus is that the interest you pay is tax deductible.
The IRS says joint filers can deduct all the interest to a
maximum of $100,000 on home mortgages.
It's easy to shop and compare bad credit second mortgages online
at reputable sites like www.badcreditsecondmortgages.com/. The
no-obligation application process is quick and confidential.
Interest rates are still relatively low, but might rise in 2006,
so now is a great time to see if a second mortgage is a good
financial move for you.
About the author:
Mike Hamel is the author of several books and the Senior Writer
for AIM Techs (www.salesandmarketingllc.com), an Internet
marketing company that specializes in improving visitor-to-sale
conversions using proprietary software and advanced SEM
techniques.
Written by: Mike Hamel
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Mortgage Brokers - The Nuts and Bolts
Using a mortgage broker to shop for home loans can make the
borrowing process a lot less stressful than doing it yourself.
Here are the nuts and bolts on getting a good broker.
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Refinancing Second Mortgages
Refinancing a Second Mortgage
For individuals that have two mortgages, there may be advantages
to refinancing a second mortgage. If you're one of these
individuals and are considering refinancing a second mortgage,
there may be good reason... ...read more
Subprime Hybrid Mortgages
Subprime hybrid mortgages offer temporarily low rates for
borrowers while they work to rebuild their credit. With a
sub-prime hybrid mortgage, you don't have to pay PMI, saving
hundreds a year. After two or three years of on time payments,
you... ...read more
Subprime Mortgages - How Large Of A Down Payment Do You Need?
Subprime mortgages offer more flexibility with down payments
than conventional home loans. You can choose to put nothing or
over 20% down. And with a subprime mortgage, you don't have to
worry about paying private mortgage insurance.
... ...read more
Things to consider regarding mortgages
Make payments on your mortgage early, paying extra if you're
allowed. Not only does this reduce the total debt that you owe
on your home, but it increases your equity and looks good on
your credit report. You should also pay down or pay off... ...read more
