Second Mortgage Rates And HELOC Rates With Bad Credit

Sept. 2, 2010 - PRLog -- If you are a homeowner with a first mortgage and have built up equity in it, you may qualify and get a second mortgage with bad credit.A second mortgage loan is also called a home equity loan and is secured by the equity in your home. Your credit scores do not have to be nearly as high for a purchase money loan, but it still needs to be fair. Loans Store professionals work on loans for all credit ratings.

Credit scores are what the lenders usually check to decide how much of a risk you pose for defaulting on a loan. They have to try and compensate this risk by larger monthly payments and higher interest rates. This is the main reason people with better credit scores get a lower interest rate because the lender considers them as having low risk on repayment. Because lenders suppose that people with bad credit already are more prone to default, they have to demand a higher interest rate to make their odds safe in a poor credit mortgage refinance loan.

The main reason a lender might even be willing to consider your bad credit score level for second mortgage rates finance is because it will be a secured loan. Thus in case of defaults, foreclosure on the property yields their finances and saves them from monetary loss. Moreover, filing for Chapter 7 bankruptcy would leave your lenders with nothing to recover. The only risk free situation is if your equity level is adequate to cover their principal and interest.

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Second mortgage lenders are not as safe as the first mortgage holders. Chapter 13 bankruptcy gives preference to the first mortgage and a second mortgage is considered as an unsecured debt. This makes home refinance with bad credit of low priority and they stand to lose much of what you owe them. Usually, if a lender doubts or confirms that you may sooner or later file for bankruptcy, they will definitely not award you a second mortgage loan.

Another option to consider is a home equity as a source of a line of credit. If you need to borrow immediate funds, one realistic and handy source of credit is a home equity line.

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Homeowners who have missed, or are struggling to make their mortgage payments, now have some relief. President Obama's mortgage refinance stimulus plan makes an estimated 9 million homeowners eligible for a home mortgage refinance at a 4.5% fixed rate http://www.loansstore.com/mortgage-refinance-loans/second...