Second Mortgage & Bad Credit Loans

Jul 13 2020 Published by under Uncategorized

Do you have a low or bad credit score and are in need of a loan and have faced rejection from the banks and other lenders? If you want to consolidate debt, complete home reno’s, payoff credit cards or whatever the case may be, second mortgages are an excellent option that can help you out now and in the future. By consolidating your debt with a second mortgage and eliminating all of your credit card debts and other consumer debts you will be making some serious improvement to your credit rating.

The bank puts a lot of emphasis on your credit score when determining whether or not to give you a loan, as you may have already found out, if your credit score is below 650 you will likely have trouble getting a loan from the bank. As mentioned above, using a second mortgage to consolidate your debts will “clean up” your credit report and make significant improvement to it. You need to look at it as a stepping stone process, where you consolidate your debts with the second mortgage, then continue to rebuild your credit, and then refinance the first and second mortgages into one new low rate first mortgage with an institutional lender like a bank.

Finding a second mortgage bad credit loan can be difficult because finding a lender to take on this more risky position can be difficult. Speak with an experienced mortgage broker in your area and you will receive professional advice and service, and can feel confident that you have a solid financial plan.

Mortgage brokers have access to many second mortgage lenders to find you the best second mortgage rate possible. Your broker will thoroughly inform you on the lending terms and the financial plan to refinance you out of the second mortgage into one new low rate mortgage that you may not currently qualify for with your current credit score.

Second Mortgage lenders do not put as much emphasis on your credit score as an institutional lender like a bank does. However, a second mortgage lender still wants to see that you can service the loan and may require that the some or all of the second mortgage proceeds are used to payoff other high rate debt.

Get A Second Mortgage To Refinance With Bad Credit

So how does a second mortgage work? The second mortgage lender is mainly concerned with the amount of equity in your home because this is what the loan size is going to be based upon. The lender will only lend up to a certain loan to value ratio which is often around 80%, with some lenders going as high as 85%. What does this mean to you? If you own a $300,000 home, and you currently have a first mortgage of $200,000, this mean the second mortgage lender will be willing to provide you with up to $40,000 as a second mortgage secured against the home ($40,000 + $200,000 = $240,000 which is 80% of the home’s value ($300,000). To start the process you will need to fill out an application and have an idea of the approximate value of your home. If the mortgage broker feels you can qualify for a second mortgage the next step is to review your credit report and order an appraisal on the home. The second mortgage lender will require an appraisal to be completed on your property by one of their approved home appraisers and you will be responsible for the cost of the appraisal which averages around $300. Once the appraisal is completed and there are no significant issues with the home, then the second mortgage lender will issue what is called a mortgage commitment which will have all of the terms of the loan and it is your mortgage broker’s responsibility to ensure you fully understand the terms. If you agree with the terms of the loan, then the next step is to have everything sent off to a lawyer to finalize the transaction. This is the same process as you went through when securing your first mortgage. The lawyer will finalize the transaction for you and once everything is completed he or she will then release the funds to you.

How can a mortgage broker help you? Brokers have relationships with Bad Credit Second Mortgage Lenders who will work with homeowners to provide as much LTV as possible, and have helped many clients get second mortgages in order to access equity and take care of financial emergencies.

Can You Refinance A Second Mortgage?

Yes! refinancing out of your second mortgage once your credit is better is critical and must be planned for, second mortgages are often short terms of 1-2 years. You should not plan on renewing your second mortgage, if the funds are used properly from the second mortgage you will be able to combine the two mortgage loans into one new first mortgage with an A or B lender by the time the term is up. You must be aware of the costs of doing this, if you are breaking one of your current mortgage terms to do this refinance, make sure you calculate the penalty of doing this into whether it is worth it. You will also be looking at more legal costs and possibly a new appraisal but more often than not, refinancing the two mortgages into one is your best option as second mortgages often come with a high rate.

Comments are off for this post

Get a Bad Credit Home Mortgage Loan Today

Jul 13 2020 Published by under Uncategorized

Being approved for a bad credit home mortgage loan is not impossible. In fact there are a few lending institutions that specialize in this kind of loan for people that are not qualified for loans with major financial lending institutions. This kind of loan is especially tailored for people with less-than-perfect credit, but will have still have some qualifying terms that the borrower will need to qualify for.

There are two types of bad credit home mortgage loans. The first is for people that are looking to buy a home. The second is for people that wish to refinance and existing mortgage. To qualify for either type of loan the borrower is going to have to show proof of being able to repay the loan. This involves showing that the borrower has a stable job and has been employed for a certain minimum amount of time. The lender will also want to see proof of the level of income being made to ascertain whether the borrower can actually afford the loan or not.

If you think you qualify for such a loan then getting approved is not that hard if you just show the lender the proper information. Lenders that offer loans to people with bad credit try to first ascertain why the person has such a low credit rating. Often people run into major expenses such as unexpected medical bills, costs caused by natural disasters and family crises. This can make it impossible for people to pay their credit cards or loan payments and so results in them getting a bad credit rating. This kind of situation is really not that uncommon, and these lenders know that these people are only in a temporary bad situation but have the income to normally make their loan payments and are willing to lend money to these people although at a higher interest rate.

When a person loses their job for a short time because they are looking for a new job, or the company they work for is in some kind of financial trouble, can sometimes benefit from a bad credit home mortgage loan. Often a lender will allow the person to refinance their mortgage so that they can lower their monthly payments by extending the loan period. The borrower gains because refinancing can be used to pay all past due payments and even put some badly needed cash in the pocket of the borrower. The lender gains by providing a loan at a much more profitable interest rate.

The greatest long-term benefit for the borrower with bad credit is that by making regular payments on their new loan for a reasonable period of time, it will strengthen their credit score. This better credit rating will then allow the borrower to refinance the bad credit home mortgage loan at a better interest rate in the future.

Comments are off for this post

Should I Get a Reverse Mortgage or a HELOC Credit Line?

Jul 13 2020 Published by under Uncategorized

The number of financial products available to older homeowners is growing. Access to home loans, credit lines, and reverse mortgages appears to be improving. But which is the best option for you?

Rising Expenses & Uncertainty

Many older homeowners are on fixed incomes. The challenge many face is that expenses such as healthcare costs are not fixed. Healthcare costs certainly are not fixed.

At the same time more boomers and seniors are finding their kids aren’t financially supporting themselves. Fortune and The Pew Research Center reveal that even though unemployment for young adults has dropped to around 8% in mid-2015, even fewer are now living independently than in 2010 (just 67%). Yet, financial expert Dave Ramsey warns that “the biggest expense facing baby boomers today is not their children’s’ college bills, but parent’s elder care.”

Many retirees are finding they are far less flush than expected too. The stock market hasn’t been kind, and is still estimated to be around 60% overvalued. At the same time the Social Security Administration continues to warn that there isn’t going to be enough money to pay out what is due.

Thankfully trillions are being regained in home equity. Yet, many Americans are finding they are house rich, and cash poor again. Liquidity and cash is key to surviving and enjoying the next few years.

So what are the best ways to tap into underutilized home equity?

Conventional Mortgages, Second Mortgages & Credit Lines

The Mortgage Bankers Association and Mortgage Credit Availability Index shows that access to home mortgage credit has been rising since February 2012. Inman News credits this largely to the expansion of mortgage programs.

Conventional mortgages, second mortgages, and home equity lines of credit (HELOCs) are all options. Yet, the traditional versions of these loan programs come with a number of challenges and disadvantages for older homeowners.

Most notably this includes:

1. Difficulty in qualifying for home mortgage loans

2. The need to consistently generate income to pay mortgage payments

3. High interest rates on 2nd mortgages

4. Potential for lenders to cap or close credit lines during housing downturns

5. Leaving large debts, and monthly financial obligations for heirs

How Do HECM Reverse Mortgages Work?

A HECM is the FHA reverse mortgage program. This is a federally guaranteed and sponsored Home Equity Conversion Mortgage. It allows homeowners aged 62 and older to convert illiquid home equity to liquid, usable cash and credit.

The real beauty of this financial tool is that is pays the homeowner, versus the reverse.

The payouts on reverse mortgages are flexible and can be customized to your personal needs.

Your funds can be taken as a lump sum, monthly payments over a specific amount of time, monthly payments over your lifetime, drawn from a credit line or a combination of these options

The most flexible option is the credit line.

Highlights of a Reverse Mortgage Credit Line include:

1. A built in growth feature which consistently adds access to more funds over time.

a. A reverse mortgage credit line grows at a compounding rate (interest rate +1.25%)

b. Any payments made to your principle balance will also cause your line of credit to rise by the same amount. The increase of your credit line will grow at the compounding rate, giving you more money for use in the future.

2. A reverse mortgage credit line is ‘open credit’, you can borrow from it, or put money back into it without penalty.

3. Once established, your credit line works independently from your home value and your loan balance.

4. Cannot be taken be taken away during market downturns (as long as you meet your contractual obligations such as paying your property taxes and homeowner’s insurance.)

5. Can be set up in early retirement years and be reserved for future increased liquidity, while maintaining just a minimum of a $100 balance.

6. Can be used to avoid taking out money from investment accounts during market downturns or used in lieu of taking Social Security income until your benefits are maximized.

Your reverse mortgage credit line cash can be used for any purpose from paying off credit card bills, to making home repairs, to helping kids and parents, gifts for the grandkids, investing, and covering medical bills. Or just keep it as a reserve fund. It’s your money – you choose.

Find Out More…

Having more liquidity is a pressing issue for millions of Americans today. Traditional mortgages and HELOCs can sometimes be more of a nuisance and threat than benefit for aging homeowners. In contrast; a reverse mortgage credit line can help property owners stay ahead of their financial needs without increasing their burden. It’s your money. Make sure you are making the most of it!

Check out the Reverse Mortgage Calculator to see what you are entitled to today.

Comments are off for this post