Nobody ever intends to end up with bad credit. When you decide to consolidate your credit card debt and student loans or make home improvements and realize your credit is not what you had hoped, it can be a big blow. The good news is that you still have options. A secured loan or a loan secured against some kind of collateral is easier to obtain for people with bad credit than an unsecured loan. However, remember that a loan secured against your home means that the lender takes your property if you cannot make your payments, so be sure that you need and not just want that loan.

1. Find the Best Bad Credit Second Mortgage
Although it seems strange to take on more debt to improve a bad credit history, a home equity
loan may be the solution to your financial problems. Learn when you should consider a loan, and
when to look for other options.
Nobody ever intends to end up with bad credit. When you decide to consolidate your credit card
debt and student loans or make home improvements and realize your credit is not what you had
hoped, it can be a big blow. The good news is that you still have options. A secured loan or a
loan secured against some kind of collateral is easier to obtain for people with bad credit than an
unsecured loan. However, remember that a loan secured against your home means that the lender
takes your property if you cannot make your payments, so be sure that you need and not just
want that loan.
Types of Bad Credit Second Mortgages
Just like a second mortgage for people with good credit, you have two choices:
* Home equity loan
* Home equity line of credit
Both loans are determined based on the amount of equity that you have built up on your home --
the amount that you still owe on your mortgage subtracted from the total value of your home.
When people think of a second mortgage, they are usually thinking of a home equity loan, in
which the borrower receives in a lump sum, usually at a fixed interest rate. A home equity line of
credit or HELOC can be used more like a credit card, with the borrower able to withdraw smaller
amounts over time. With a home equity line of credit, your payments against your balance open
up your credit reserves for you to borrow against again.

2. Home Equity Loan Pros
Obtaining a second mortgage can be a wise choice even for people with bad credit if you can
also use your loan to improve your credit score.
* Making your payments on time and in full on your mortgage can be one of the best ways to
improve your credit score.
* Using your second mortgage to consolidate debt can be very wise. When consolidating debt
be sure that you are paying off debt with higher interest rates than the rates on your second
mortgage.
* Using your second mortgage to pay for education can help you to obtain a higher paying job
that will make it easier for you to meet all of your obligations in general. However, if going to
school means taking time off of work, you will want to be sure that you will be able to make all
of you payments on your first mortgage and second mortgage or you may risk losing your home.
* Using your second mortgage to pay for home improvements can raise the value of your
home. If you are making the improvement because you are interested in selling, be sure to
request the loan before you put your home on the market or it will be very difficult for you to
obtain a second mortgage.
* Keeping your good interest rate on your first mortgage can be a good reason to get a second
mortgage as opposed to refinancing your first mortgage with cash out. You may end up with a
high interest second mortgage, but in the end, you will be saving money.
Home Equity Loan Cons
You always want to do your research when you take out a loan. Be sure to consider these cons
before you put your home on the line.
* If you are already struggling to make your current mortgage payment, adding another
monthly responsibility may damage your credit further and cost you your home.
* You may be able to get a better interest rate refinancing your current mortgage that you are
able to on a second mortgage. First mortgage rates are usually lower than those on second

3. mortgages and if you can get a lower interest than you currently have, a cash-out refinance may
be a better option for you. Be sure to shop around before you make your final decision.
* Lenders may try to take advantage of your poor credit history in order to take your home.
Make sure that you understand all of the terms of your second mortgage loan. Balloon payments,
which require you to pay the full balance at the end of the term or the fluctuating rate of a
HELOC, may put your home in jeopardy if you are unable to make your payment to your lender.
Even with bad credit, you can get a second mortgage, but be sure to investigate all of your
options before you sign on the dotted line. For more articles on Bad Credit Second Mortgage,
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