The second mortgage after bankruptcy is the easiest way to access cash. Online subprime lenders can claim a mortgage as soon as the bankruptcy is resolved. But for near-traditional rates, it’s best to wait two years and build a solid credit history.
Bankruptcy and subprime lenders
Millions of people file for bankruptcy each year for many understandable reasons, including unemployment and illness. Secondary lenders understand this and are willing to lend to these people.
Subprime lenders who specialize in high-risk loans on unconventional terms can fund virtually anyone. Legitimate lenders offer competitive rates at reasonable closing costs.
Bankruptcy Affects Your Second Mortgage Rate
The first two years after bankruptcy are the most difficult credit scores. Immediately after bankruptcy, you will have access to a class “E” loan, which is the highest interest rate mortgage.
After a year and a good credit history, you can benefit from better rates with a category “C” loan. The rate is generally about 3% to 5% higher than the traditional rate. And within two years, you can potentially have a great credit score and get a lower mortgage rate.
Other factors also affect your mortgage rate. Keeping a high percentage of your stock in cash can increase your credit score.
Compare purchases for a better price
Whenever you decide to get a second mortgage, you have to look around for the loan fee before you can settle with the lender. Each financial company has its own formula for determining fees and closing costs. Careful examination of your loan quote will guarantee the lowest rates and rates.
If you don’t miss a particular lender in mind, start with a mortgage broker site. They partner with several different companies to offer special offers. From there, you can extend your search to individual lenders’ sites.
When looking at the charges, make sure that the closing costs are also included. For some lenders, low rates are only available if you pay thousands of dollars in advance. If you want to minimize loan processing costs, you can also consider a home equity credit line.