Qualifying For 2nd Mortgage Loans: What your lenders will look for

Before you reach out to 2^nd mortgage lenders, to talk about that secondary loan against your home, it’s nice to know what sort of criteria they use in order to qualify or disqualify potential borrowers. Knowing the metrics they will apply to your application for a 2^nd mortgage means you can prepare yourself for the most important meeting of your financial life.

What mortgage companies like to see

As a lender of funds, mortgage brokers look for three vital factors when deciding whether to approve (or reject) your mortgage application:

Your Credit Score: By far, this is the most important factor. If you have a credit score of between 650 to 680, then you may be eligible for a loan. Higher credit scores are preferable to lower ones.
Down Payment Affordability: One of the factors for approving 2^nd mortgage loans, is whether the borrower can afford the down payment. If you have sufficient funds to make that down payment, without having to borrow for it, your application is likely to be looked at favorably.
Debt to Income Ratio: This metric is a financial measure that proves to 2^nd mortgage lenders that you can sustain your mortgage payments over the long term. If you borrow more than you earn, then that’s a red flag for your lender. Before applying for a second loan, you need to ensure that most of your outstanding debt has been paid off.

Of course, there may be other criteria that go into the decision too. But these 3 factors form the basis of the decision-making process for most reputable mortgage companies.

Turn to the professionals

If you feel that you need help with your second mortgage application, or are wondering whether you will qualify for preferential rates, then you should speak to a mortgage adviser at Mortgage Genie. After reviewing your entire credit profile, they will be able to best advise you on the type of 2^nd mortgage you should apply for. Preliminary consultations with a mortgage professional are usually FREE, and without any obligations. It’s worth an hour of your time!