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Overcoming Bad Credit Scores with a Home Equity Loan or Second Mortgage
By Lynda Nelms
If you have bad credit, but want to save some money and repair your credit score, take out a home equity loan. Of course you need to own a home first, but if you already own a home, and are serious about raising credit score and saving money, then a 2nd mortgage is a great start. Home equity loans will enable you to pay off collections, bad debts, judgments, and past due credit cards. Even if you had a bankruptcy years ago, home equity loans can offer solutions to many high interest debt problems. Second mortgages have become somewhat easier for homeowners to qualify for with credit issues, such as, low credit scores, late payments, or collection accounts.
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Consolidate Credit Card Debt and Lower Your Monthly Expenses with a 125% Fixed Rate Equity Loan |
Loan Amount |
Current Payments |
Home Equity Payment* |
Monthly Payment Savings |
$30,000 |
$695 |
$294 |
$301 |
$50,000 |
$1,145 |
$490 |
$655 |
$80,000 |
$1,792 |
$784 |
$1,008 |
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* This is a sample of refinanced credit debt to and assumes interest rate for the Second Mortgage at 11.25%.
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Important Home Mortgage Loan Terms |
Adjustable Rate Mortgage
Also known as ARM. This mortgage has a variable rate that is not fixed. The interest rate adjusts periodically based on the index it is associated with. |
Annual Percentage Rate - APR
Also known as APR. It is defined as the cost of credit for a loan to a borrower annually. The Federal Truth in Lending Act requires that every home loan includes discloses with the APR. |
Cash Out Refinance Loans
Refinance loan transaction that includes extra money the borrower get back with the new loan. Most Lenders allow cash back in refinancing for home improvement, debt consolidation or to pay for expenses like cars or education. |
Fixed Rate Equity Loans
Fixed rate loans enable principal and interest to be paid with each monthly payment. These loans feature simple interest that is amortized over a fixed term. |
Home Equity Credit Line
Considered a 2nd mortgage that provides a revolving line of credit secured by home. Flexible home equity lines offer low payments with only the interest due monthly for the draw period. |
Stated Income 2nd Loan
These loans have become popular with Self Employed borrowers because it requires less paperwork. The loan is based more on credit and equity, rather than income. |
Jumbo Mortgage
This is an unconventional loan that is greater than $415,000. The limits are set by the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation. |
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Second Mortgage Rates |
Get accurate information from a professional loan officer. No cost with no obligation.
Find out current rates for Fixed 2nd mortgages & rates for the variable home equity lines of credit. |
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