Compare Mortgage Quotes

Refinance Rates for Today

Please enable JavaScript for the best experience.

In the mean time, check out our refinance rates!

Company Loan Type APR Est. Pmt.

Can I get second mortgage with bad credit?

Posted on: 27th Dec, 2005 10:20 am
i am looking for a second mortgage to make some home improvements. i have talked to some of my friends who had it previously. they are telling that it is difficult to get a good rate for a second mortgage with a poor credit that i am having. any suggestions?
Can I utilize the money to pay off my first mortgage?
Posted on: 27th Dec, 2005 10:23 am
Hi Fred,

What your friends have informed is true to not only second mortgage but to any conventional mortgage with bad credit. But believe me, toady it is not also so difficult to afford.

With the globalization in economics the interest rates have been lower than before. Today it has become affordable to many and the number of application for second mortgage bad credit has increased considerably.

Compared to first mortgage, the rate in second mortgage is going to be a little higher and even more with bad credit. Normally second mortgages are available today at rates as low as 5%.

There are sub prime lenders offering second mortgage for people with bad credit. You may get a second mortgage even with a rate just 0.5% higher than the traditional loans. Since, offering second mortgage is risky to the lenders so, they offer the mortgage with some higher rates.

You will be able to find lenders offering second mortgages to people with scores of 649 and less. Depending on the scores and the risk level the rate may vary from 5% to 12 %.

It is always better to shop around a lot to look for the best offers and the lowest possible rate before you apply. You should look around for the rates that you may get stating your income, home's value and credit and then decide.

It is advisable not to take a second mortgage to pay off the first as the rates on second mortgages are always higher than a first mortgage.

Hope this information will help you. You can get more ideas on second mortgage here.

Regards,
Blue
Posted on: 27th Dec, 2005 10:44 am
Hi Fred,

Blue has provided some good information but you should also keep in mind that getting the lowest rate doesn't mean always that you are getting the cheapest loan.

You need to analyze your financial condition and the time period within which you want to repay also counts.

Angel
Posted on: 27th Dec, 2005 10:53 am
Back with some more information.

From January next year, the loan limit for second mortgage will probably be $208,500.

Today internet is the best way to search for lenders offering second mortgage bad credit.

Angel
Posted on: 27th Dec, 2005 11:08 am
Fannie Mae announced 6 months back that it will apply new conforming loan limits, as determined by the office of federal housing enterprise oversight based on federal data on mean (average) home prices, to increase its single-family mortgage loan limit to $417,000 for 2006.
Posted on: 15th Jun, 2006 02:24 pm
Yeah that's true. Thanks creditmortgageindex, for the information. :)

I want to add that as per Fannie Mae the limits for two-family loans $533,850, three-family loans $645,300, and four-family loans $801,950. What Angel has said is also true that the loan limit for second mortgages in 2006 will be $208,500.
Posted on: 15th Jun, 2006 02:31 pm
I have bad credit with 5 cards and around $27000 in balances at rates ranging from 11% to 20%. I consulted a friend and he suggested taking a second mortgage. So I approached a lender and he said I would be able to qualify for a $35,000 second mortgage even with bad credit. I would be offered the loan at a rate of 15%. I am of the impression that it will help me consolidate the debts and reduce my monthly payments. Am I going the right way?
Posted on: 25th Apr, 2007 01:06 am
Welcome Macayle.

I don't think you are going the right way, because the interest rate on some of your credit cards is about 11% or slightly higher than that. Now, would you like to replace a 11% or 12% loan with a 15% second loan? I feel if you consolidate your debt, first consider the high interest debts leaving aside the lower-interest ones. However, if the introductory rate on a credit card is 11%, it may go up to above 15% any time. So, in that case, taking out the second loan will help.

Since you have bad credit, here's a word of advice – pay off the bills and then think about what went wrong with the credit card debt payments and why you were not able to pay it off with your finances.

Try to analyze your financial situation, what went wrong with your budget and if you were into overspending which is why you couldn't make up for the cc debt payments. This will help you to avoid falling into such a large debt in future.

Thanks.
Posted on: 25th Apr, 2007 01:12 am
Hello everyone,
I'd like to start by saying you've all offered some great points. But, I'd like to offer some insights to what lenders such as myself would consider when we offer a mortgage. We would start by finding out what your actual current credit score are. We will than look at mortgage history, debt to income ratio etc.. Finding this out would help us determine what credit grade( Interest rate) you'll fall into. Your interest rate is primarily
based on this information.

Currently the interest rate offered to borrowers with less than perfect credit on a second mortgage can range from 11%-13%. Sometimes it would be advantagous to just get one loan that would allow you to consolidate your credit cards and also get some money back at closing for the home improvements. You would need to have a lender run some scenarios for you on both options. This should help you to identify a program that would give you a feasible monthly payment. Which of course, is the most important thing of all.

Another important thing would also be to find out how much equity you currently have to work with. Without any equity, you don't have a loan.

I hope I was able to shed some light on how the mortgage process works.


From your friend,
Posted on: 25th Apr, 2007 09:37 pm
Hi Wills,

Is it possible to get second mortgage at higher debt to income ratio?
Posted on: 26th Apr, 2007 04:50 am
Yes. You can have a max DTI of 50%
Posted on: 26th Apr, 2007 08:08 am
Macayle,

If you go for a second mortgage, the time period over which you need to pay for private mortgage insurance (PMI) may be extended. Usually lenders cancel the PMI policy when the outstanding loan balance is less than 75%-80% of the home value. But since you have taken out a second loan, the lender may not be willing to cancel the PMI.
Posted on: 30th Apr, 2007 03:49 am
HUH........guys I'm not sure where you are getting this info but there is no such thing as a fannie mae second mortgage loan limit.......you can't get a second mortgage for a million dollars if you have the equity......and yes I whave written one that big.....DTI can be higher than 50% it depends on the lender
Posted on: 01st May, 2007 04:27 pm
I don't know but it seems there are fanniemae loan limits on 2nd mortgages, its $208,500 and in Alaska, Hawaii, Guam & the US Virgin Islands its $312,750, I found it at:http://www.fanniemae.com/aboutfm/loanlimits.jhtml
Posted on: 01st May, 2007 04:39 pm
There are other options than fannie mae........the majority of second mortgages are done by investment banks.......with no limits
Posted on: 01st May, 2007 04:49 pm
Page loaded in 0.276 seconds.