Second Mortgage Bad Credit Loan Made Easy

What Is a Second Mortgage Bad Credit Loan?
A second mortgage bad credit loan is a mortgage taken out in “second position” on a property that already has a mortgage. The second mortgage takes second place in the settlement of any claims against the home.

Second mortgage bad credit loans come in various shapes and sizes. There are fixed-rate loans, adjustable-rate loans and home equity lines of credit (also known as HELOCs). A fixed-rate mortgage is the way to go when you need all the money at once or when you want your payments to remain the same over the life of the loan. An adjustable-rate mortgage (ARM) is a good choice when interest rates are high, or when you want to refinance a higher, fixed-rate loan. A HELOC is a credit line that can be drawn upon as needed up to the limit of the loan. It is similar to a credit card in that you can draw on it when needed, up to the loan amount.

The “Bad Credit” Part
You can’t be denied credit based on race, gender, marital status or ethnicity. Your right to credit is guaranteed by the Equal Credit Opportunity Act. But how much money you can borrow and how much interest you will be charged for it will depend on your credit score.

Credit is easy to get and hard to control. And not using it properly will get you a low FICO score from the three major credit bureaus: Equifax, Experian and Trans Union. Generally speaking, 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 poor credit territory:

Improving Your Financial Situation
It’s a catch 22 that getting a bad credit loan can lower your FICO score initially but it can also help you raise it in the long run—if you use the money to pay off high interest debts like credit cards, department store cards, medical bills, car loans, etc.

Used wisely, a second mortgage can improve your monthly cash flow by leaving you with a single monthly payment. No more late fees or high interest rates to worry about. 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 since it’s a loan secured by your home. The IRS says joint filers can deduct all the interest to a maximum of $100,000.


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