Land A Second Mortgage With A 125% LTV Bad Credit Loan Deal - 5 Tips

Wednesday, October 16, 2013

There is no doubt that when money is tight, you can start to feel the pressure on you 24/7 to find a way to get the funds you need. Sometimes the pressure comes from mounting credit card bills or other regular expenses. At other times, it comes from a pending large (but unusual) expense such as an upcoming wedding or an unexpected funeral cost. And, still other times it comes from having to take care of emergency car or home repairs.

There is no doubt that for each and every one of us, the money that is left over after you pay down all of your expenses can vary quite a bit from month to month. Rich or poor, there are just plain times when you need something extra. If you happen to own a home, you may be able to qualify for a second mortgage to get the money you need - even if you have a bad credit score.

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If you want to land a second mortgage, these five 125% bad credit loan deal tips can help:

1. A second mortgage is also called a home equity loan:

A second mortgage is simply a way to take out a loan while using your home's equity as collateral. They are sometimes called second mortgages because the first mortgage lender would have first rights to any claims on your home, in case you were ever unable to repay your loans. If there is anything left over, the second mortgage lender would then be able to recover the remaining assets, up to the amount of the outstanding loan. Another name for a second mortgage loan is "home equity loan."

2. You can use the money for anything you like:

Once your loan funds, you can use the money for any purpose you like. Many second mortgage borrowers use the cash from the loan to fund home improvements, pay off high-interest credit card debt, pay down medical bills, or even take a vacation.

3. Most second mortgages have a loan-to-value limit:

When you read the details about any given lender's mortgage products, you will find that most of them have certain loan-to-value (LVT) requirements. For example, an 80% LTV second mortgage means that they will allow you to borrow up to 80% of your home's appraised value. Remember, included in the "amount borrowed" is the outstanding value of your existing first mortgage.

While 70% or 80% LTV loans are the most common, some lenders will allow you to go up to 100% or 125% LTV.

4. Calculate your loan to value:

To calculate the type of LTV loan you will need in order to borrow the cash amount you want, start by adding the amount you want to borrow to the current outstanding first mortgage balance (unpaid balance). Then, divide those into your home's value. If the result is 1.25 or lower, you can get the money you need with a 125% bad credit second mortgage.

5. If you have bad credit, search for "bad credit second mortgage lenders":

For those with a bad credit score (say, under 600), you will need to specifically seek out bad credit second mortgage lenders. They specialize in working with people who have poor credit scores. Make sure you target at least 3-5 lenders before starting to make calls or applying online.

Take these 5 tips into how to land a 125% bad credit second mortgage.

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