Preparing Your Credit
While the process of applying for a second mortgage
loan is often somewhat less complicated than the requirements
associated with an original mortgage, there are still
several pieces of information and documentation that
will be required by your lending institution.
Before applying, obtain a copy of your credit report
from one of the three major credit reporting bureaus,
Equifax, Experian, or TransUnion. You can do this online,
on the phone, or through the mail.
Make sure your credit report is accurate. If you find
errors, omissions, or outdated information on your credit
report, it is critical that you immediately notify the
credit bureau in writing and provide whatever documentation
is necessary. The bureau is obligated to correct any
misinformation that appears on your report.
If you neglect to audit and update your credit report,
your credit score may not accurately reflect your financial
health. This can complicate the second mortgage loan
application process. Your application may be rejected,
or you may not receive the most favorable interest rate
available. Failing to be certain that your credit report
is completely correct can be a costly mistake. Remember,
an ounce of prevention is worth a pound of cure when
it comes to being ready for the loan application process.
If you have questionable items on your credit report
that are accurate, such as late payments or charge-offs,
be prepared to explain the occurrence of such; for example,
“I was laid off my job unexpectedly.” Many
lending institutions will accept a written statement
clarifying any past negative items, assuming you have
made a good faith effort to resolve the issue with the
creditor in question.
Once you are confident your credit is ready for scrutiny,
you will feel more comfortable with the second mortgage