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Bad Credit Second Mortgage by the Numbers
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By Mike Hamel

Bad credit second mortgages make up a sizable part of the mortgage market. According to a recent survey by the Mortgage Bankers Association, the number of second mortgage originations increased by 13 percent in the second half of 2005 and closed-end second mortgages increased by 33 percent. The survey included 114 lenders that originated $189 billion in second mortgages, many of them to people with bad credit (www.mortgagebankers.org/NewsandMedia/PressCenter/41920.htm).

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There are at least five numbers that determine the ultimate cost of a bad credit second mortgage: interest rate, years on the job, credit score, closing costs and term length.

Interest rate
The interest rate on a second mortgage is slightly higher than on a first mortgage because it is in a subordinate position. If the borrower defaults and the home goes into foreclosure, the second mortgage is settled after the first, so the lender is taking a greater risk.

The interest rate on a bad credit second mortgage will be higher still, so says Steven Frank, Senior VP at FlexPoint Funding, one of the nation

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This entry was posted on Thursday, June 8th, 2006 at 3:03 am and is filed under Refinance. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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