After filing for bankruptcy, a second mortgage loan is a simple method to get back on financial feet. You can get a mortgage from a sub prime internet lender as soon as your bankruptcy is finalized.
But, a two-year wait and an excellent credit history are preferable for near standard interest rates.
Insolvency and Subprime Lending
Every year, millions of people, for valid reasons like job loss or sickness, file for bankruptcy protection. This is why subprime lenders are eager to give money to risky borrowers.
Subprime lenders finance nearly everyone since they specialize in high-risk loans with unusual terms. Reputable lenders will provide competitive interest rates and affordable closing fees.
How Bankruptcy Affects Your Second Mortgage
Your credit will take the biggest hit in the first two years following a bankruptcy. After filing for bankruptcy, you will immediately be eligible for the highest interest rate mortgages known as E class loans.
Read: The Top 3 Ways to Save Money on Your Home Equity Loan Interest Rates
A and C class loan has more favorable interest rates after a year of responsible borrowing and a positive credit history. The average rate increase is 3-5% over the baseline rate.
And in two years, you may be able to raise your credit score to the point where you qualify for prime mortgage rates.
Your mortgage rates are affected by a number of other variables. A higher credit score is one possible outcome of maintaining a sizable portion of your equity and other liquid assets.
Searching Around for Lower Prices
You should compare loan rates from multiple lenders before deciding on a 2nd mortgage lender regardless of when you decide to get one.
Rates and fees for finalizing a loan are calculated in their own unique ways by each lender. If you shop around for different loan quotes, you can find the best possible terms for your situation.
Read: Affordable Mortgage Loans: What You Need to Know Before You Apply
A mortgage broker website is a good place to start if you are still in the process of deciding on a lender. They collaborate with a number of other businesses to provide discounts.
To broaden your search, you can then visit the websites of individual loan companies.
Conclusion
Be sure that closing fees are factored into the prices you’re considering. Some lenders will only offer you a low interest rate if you pay hundreds of dollars up advance.
If you’re looking to save money on loan fees, a home equity line of credit is another option to explore.
