Best Bad-Credit Second Mortgages - 3 Things To Try

Best Bad-Credit Second Mortgages - 3 Things To Try

When you have a bad credit score, it can feel like there is a dark gray cloud floating above your head and following you around wherever you go. Sure, you can afford to ignore that dark cloud if you never need to take out a loan or apply for a credit card. However, you would be in the minority if that were true.

For the rest of us, our credit score - good, average, or bad - exerts a strong influence over many aspects of our lives. This is particularly true when it comes to trying to take out a second mortgage at a low interest rate. If you have a bad credit score - one under 600 - you will have trouble qualifying for a low rate - or maybe even qualifying at all.

Fortunately, there are things you can do to increase your chances of qualifying. You just need to know where and how to look.

If you are looking for the best bad-credit second mortgages, here are 3 things to try:

1. Borrow as little money as possible in order to keep your loan-to-value ratio (LTV) to a minimum:

Regardless of your credit score, second mortgages - a.k.a. home equity loans - are automatically going to cost you more money in terms of the interest you pay than does your first mortgage. However, you can keep that interest rate to a minimum by borrowing less. The less you borrow, the lower your loan-to-value (LTV) ratio will be.

The LTV for a loan is simply the total amount borrowed (including first AND second mortgage) divided by the appraised value of the home.

2. Create a list of second mortgage lenders who specialize in working with bad-credit individuals:

Now, it is time to start shopping for a bad credit second mortgage lender. Create for yourself a list of at least 3-5 lenders. Make sure that they advertise themselves as either "bad credit second mortgage lenders" or as "bad credit home equity" lenders. These lenders know how to look past your credit score, focusing instead on other factors that determine your creditworthiness.

3. Shop aggressively:

Be sure to follow through with applying to each and every lender on your list. As you do, negotiate aggressively for the best-possible rate. Even companies will negotiate when they sense that you have other options.

Try these 3 things as you secure the best-possible bad-credit second mortgage loan.

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