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Preparing to Apply for a Second Chance Mortgage

I provided an overview of second chance mortgages in my blog a couple of weeks ago. For many consumers with a low credit score or a history of bad debt, it’s important to understand what steps you can take prior to applying for a second change loan to increase your chances of success. Recently, I had the opportunity to work with some borrowers I met through Hali’s Angels Second Chance Mortgage– Keller Williams Realty group.

Despite being declined three times due to past financial hardships, we were able to work together to document their situation and present a cohesive story that ultimately got them approved for an FHA loan and close the transaction. It was an awesome experience for me to be able to help these people who had experienced so much hardship in their lives. Here are three lessons that I would share with any buyer in a similar situation.

Be crystal clear on your credit situation

If your credit situation is less than perfect, it’s important that you understand your current standing. Get a copy of your credit report from each of the three bureaus, and scour them for inaccuracies. Contact each of the credit bureaus to remove mistakes. Look for debts that you need to pay off, such as accounts that may be in collections. Can you do other things, such as reduce your debt ratio, to improve your score? Be objective when looking at your report and find simple ways to improve your score and overall picture.

Clearly document the source of your issues

In many cases, credit troubles start with a major precipitating event such as a job loss, divorce, or health crisis. Once the issue has been resolved or some time has passed, people get back on track. Other situations might revolve around poor spending habits that improved as you grew older. Whatever the situation is, work with your loan officer to determine the best documentation to show the cause of your issues. For example, problems that extend from a period of unemployment might include letters from past employers showing no fault and letters from your current employer underscoring the stability of your present position.

Focus on documenting your assets and growth

An important part of the package for a second chance loan is showing how you’ve turned things around. Have you managed to secure steady employment? Pay down debts or build up savings? Met all your obligations regularly for a period in time? Discuss options with your loan officer for showing your current stability. Examples might include letters from past creditors explaining that debts are resolved or copies of bank statements and 401ks.

If you’re a home buyer in the Las Vegas area that’s been rejected for a mortgage, don’t lose hope. Call me today at Sydnee Johnson Las Vegas Home Loans to discuss your situation and look at the options available to you.


Is a Second Chance Loan Right for My Mortgage?

The last few years have been difficult financially for most individuals and families. Issues ranging from long-term unemployment to the housing bubble that affected many cities have left individuals with previously stellar credit with blemishes and lower credit scores. While the issues range from late payments to foreclosures or short sales, thanks to the recent economic improvements many people are getting back on their feet. If you’re one of those individuals, you’re probably wondering – are there mortgage options that can help you reach your dream of home ownership even if you’ve had credit troubles in the recent past?Second Chance Loans

The good news: second chance loans

The answer is yes. While traditional banks or credit unions may be hesitant to make a home loan to someone with a recent foreclosure or job loss, there are a number of alternatives to consider. Money is available from private individuals and institutions with more flexible lending portfolios. Initial interest rates may be higher than the industry average, but this may be your key to rebuilding stellar credit. Speaking to an experienced mortgage lender with connections that include second chance loan providers is the first step toward understanding your options.

You’re more than a number

Second chance loan providers understand that you’re more than just your credit score. In addition to your credit history, these lenders dig deep to understand what happened to get you off track and what steps you’ve taken to get your life back on an even keel. They look closely at factors such as whether you’ve become reemployed, whether you’ve paid down debts, how your recent payment history looks, and other factors. Understanding the story behind what happened and what steps you’ve taken to improve your current situation provides a better foundation for making important credit decisions.

Keep an open mind

Many individuals that have faced recent financial difficulties have talked themselves out of their second chance at home ownership. It’s easy to assume that no one will place their trust in you, but it’s important to remember that it’s not true. Everyone faces financial hardships at one time or another. If you’ve made honest efforts to rebuild your financial life and you’re headed in the right direction, home ownership may well be within your reach.

Are you a Las Vegas area resident that would like to learn more about second chance loan options? Contact Sydnee Johnson today to arrange for a personalized consultation to discuss your unique situation, goals, and learn more about whether alternative mortgage vehicles might be right for you.

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