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Second Mortgage Options for Subprime Borrowers
Author David Schneider | Nov 14,2007
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A second mortgage is a fixed amount of money borrowed against home equity that is repaid over a set number of years. Second mortgages often carry higher interest rates than first mortgages. However, in comparison with other borrowing options, a second mortgage can be a real money saver. Subprime borrowers have many lending options when it comes to obtaining a second mortgage. Before you shop, learn more about second mortgage options for subprime borrowers.
Access Your Credit Report Before Shopping for a Second Mortgage
Know your credit situation before the lender. Obtain copies of your credit reports from each of the three major credit bureaus nationwide: Experian, TransUnion and Equifax.
Subprime borrowers have FICO scores below 620. If your score is between 620 and 680, lenders may be wary about approving a second mortgage. Subprime borrowers can expect to pay between one and two percent more for a second mortgage.
Why do Subprime Borrowers Take Out a Second Mortgage?
Homeowners take out a second mortgage for various reasons. At the top of the list is home improvement. A second mortgage can pay for a new roof, remodeling the kitchen and placing a deck in the backyard. A second mortgage for home improvement can increase the value of your home.
For subprime borrowers, a second mortgage is a popular resource for debt consolidation. You can pay off debt and concentrate on one monthly payment, which often amounts to less money. Second mortgages are also useful for paying college tuition and other unexpected expenses, such as medical bills.
Research Subprime Second Mortgage Options
Before applying for a second mortgage, take some time and investigate the subprime market. Use the Internet as a research tool and check on a daily basis. Changes to points and interest rates occur frequently.
Look at Annual Percentage Rate (APR) for subprime second mortgages, consisting of interest, points and all fees. Evaluate points and fees individually to determine how they affect the cost of a subprime second mortgage. Typical fees may include broker fees, closing costs, underwriting and appraisal fees. In general, fees and closing costs should be lower on a second mortgage.
Shop Your Options for a Subprime Second Mortgage
When the iron is hot, it’s time to strike and start comparing quotes for a subprime second mortgage. You can obtain free quotes instantly at a Web site offering second mortgage quote comparison. A thorough evaluation of multiple offers can help locate the right subprime second mortgage for you.
Subprime Borrowers: Fixed Rate or Adjustable Rate?
On the fence about which type of interest rate will work best for your subprime second mortgage? A fixed rate second mortgage may appeal to borrowers keeping their homes for a long time. There are no surprises with a fixed rate mortgage. You know your payments for the entire life of the mortgage loan.
Adjustable rate mortgage loans can be a gamble. However, for subprime borrowers who don’t plan to keep a home for the long haul, an adjustable rate mortgage can be a way to save money. As a result of shorter-term lengths, monthly payments are typically higher. However, adjustable rates allow subprime borrowers to take advantage of lower interest rates without refinancing. Yet, interest rates can increase just as easily. Be aware that subprime mortgage lenders may make adjustable rate mortgages look more attractive during the early life of the loan.
Contact a Subprime Mortgage Broker and Negotiate the Best Deal
Since getting a second mortgage can be a tricky business for borrowers, enlist the expertise of a subprime mortgage broker to negotiate the best deal. Independent brokers often work with several subprime mortgage lending institutions and can offer more options. Before signing anything, make sure you fully understand the terms, including interest rate, points, fees and prepayment penalty.
A second mortgage is a fixed amount of money borrowed against home equity that is repaid over a set number of years. Second mortgages often carry higher interest rates than first mortgages. However, in comparison with other borrowing options, a second mortgage can be a real money saver. Subprime borrowers have many lending options when it comes to obtaining a second mortgage. Before you shop, learn more about second mortgage options for subprime borrowers.
Access Your Credit Report Before Shopping for a Second Mortgage
Know your credit situation before the lender. Obtain copies of your credit reports from each of the three major credit bureaus nationwide: Experian, TransUnion and Equifax.
Subprime borrowers have FICO scores below 620. If your score is between 620 and 680, lenders may be wary about approving a second mortgage. Subprime borrowers can expect to pay between one and two percent more for a second mortgage.
Why do Subprime Borrowers Take Out a Second Mortgage?
Homeowners take out a second mortgage for various reasons. At the top of the list is home improvement. A second mortgage can pay for a new roof, remodeling the kitchen and placing a deck in the backyard. A second mortgage for home improvement can increase the value of your home.
For subprime borrowers, a second mortgage is a popular resource for debt consolidation. You can pay off debt and concentrate on one monthly payment, which often amounts to less money. Second mortgages are also useful for paying college tuition and other unexpected expenses, such as medical bills.
Research Subprime Second Mortgage Options
Before applying for a second mortgage, take some time and investigate the subprime market. Use the Internet as a research tool and check on a daily basis. Changes to points and interest rates occur frequently.
Look at Annual Percentage Rate (APR) for subprime second mortgages, consisting of interest, points and all fees. Evaluate points and fees individually to determine how they affect the cost of a subprime second mortgage. Typical fees may include broker fees, closing costs, underwriting and appraisal fees. In general, fees and closing costs should be lower on a second mortgage.
Shop Your Options for a Subprime Second Mortgage
When the iron is hot, it’s time to strike and start comparing quotes for a subprime second mortgage. You can obtain free quotes instantly at a Web site offering second mortgage quote comparison. A thorough evaluation of multiple offers can help locate the right subprime second mortgage for you.
Subprime Borrowers: Fixed Rate or Adjustable Rate?
On the fence about which type of interest rate will work best for your subprime second mortgage? A fixed rate second mortgage may appeal to borrowers keeping their homes for a long time. There are no surprises with a fixed rate mortgage. You know your payments for the entire life of the mortgage loan.
Adjustable rate mortgage loans can be a gamble. However, for subprime borrowers who don’t plan to keep a home for the long haul, an adjustable rate mortgage can be a way to save money. As a result of shorter-term lengths, monthly payments are typically higher. However, adjustable rates allow subprime borrowers to take advantage of lower interest rates without refinancing. Yet, interest rates can increase just as easily. Be aware that subprime mortgage lenders may make adjustable rate mortgages look more attractive during the early life of the loan.
Contact a Subprime Mortgage Broker and Negotiate the Best Deal
Since getting a second mortgage can be a tricky business for borrowers, enlist the expertise of a subprime mortgage broker to negotiate the best deal. Independent brokers often work with several subprime mortgage lending institutions and can offer more options. Before signing anything, make sure you fully understand the terms, including interest rate, points, fees and prepayment penalty. |
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