What you need to know to get a 2nd mortgage or home equity loan after a bankruptcy
Written by ama on September 26th, 2009 in Uncategorized.
Getting a 2nd mortgage loan or home equity loan after a bankruptcy is workable. However, loan applicants should be aware of certain disadvantages to bad credit loans. A bankruptcy is destructive to credit scores.
Bankruptcy is not encourage among the finanical experts. The people who filed for Chapter 7 or Chapter 13 will qualify for higher rates on homes, cars, etc. Before applying for a 2nd mortgage, know what to expect and understand the basics of getting a reasonable rate.
Expect higher finance charge or Interesr rates
After a bankruptcy, many people are hesitant to apply for credit. They expect higher rates, which will also increase monthly payments. However, obtaining new credit accounts is crucial to re-establishing and building credit history. On the one hand, getting banks to ok a simple credit card app can be challenging after a bankruptcy. Due to this reason, often time people choose to get a 2nd mortgage.
Getting approved for a 2nd mortgage following a bankruptcy is easier because the loan is secured by your home or property. Thus, if you stop paying on the loan, the lender may claim your property and resell it to recoup their loss.
While these loans are great for improving credit, applicants should not expect the best rates. Traditionally, 2nd mortgage loans have higher rates than first mortgages. However, if you just had a bankruptcy, expect higher than average interest rates. To avoid a huge monthly payment, borrow a small amount of money.
Another option involves borrowing money, and depositing the funds into a savings account. Repay the lender with the deposited funds over the course of the first 6 months. This way, you improve credit history and avoid the risk of not being able to repay the loan.
Using Sub Prime Loan Lenders For Best Rates
Applying for a 2nd mortgage with your current lender may not be the best option. If you obtained your first mortgage with good credit, the lender may not approve your loan application following a bankruptcy. Rather, get in touch with more than one sub-prime mortgage brokers. Sub-prime home mortgage lenders will fund all types of credit. Hence, applicants can get approved after a bankruptcy, foreclosure, repossession, etc.
Furthermore, the sub-prime lenders can give you a lower rate than the regular mortgage companies. Online mortgage brokers can help you find a bad credit or sub prime lender. Moreover, mortgage companies have many different mortgage loan programs. As a result, borrowers can choose the mortgage company offering the lowest interest rate and mortgage loan terms.
This article was written with the help of the staff at Los Angeles Mortgage and Chicago Mortgage.
Supported by Dallas Mortgage
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