When you own a home and need cash but have a bad credit score, your situation may actually be much more favorable than you may think. The fact that you own a home means that you are potentially able to take out a second mortgage in order to give you access to the cash you need.

A bad credit second mortgage is easier to qualify for than, say, an unsecured bad credit personal loan. The reason for this is that with a second mortgage, you are actually using the equity in your home as collateral. So with a second mortgage, your lender has some assurance that they can recover some or all of the loan amount in the event that you were someday to default on the loan (i.e., not be able to pay it back).

Most people seeking a second mortgage who have a bad credit score are concerned first and foremost that they will be able to qualify for a good interest rate. The primary concern that many of these borrowers have is that the bank or other lender is going to stick them with a sky-high rate due to their low FICO score.

The right second mortgage lender will not charge you an arm and a leg for your second mortgage home loan, however. Here are 5 tips on how to find a second mortgage through an interest-only bad credit home loan:

1. Decide how much is a reasonable amount of cash to borrow:

Remember, this is not free money; the loan will cost you in the form of closing costs (in some cases) and in the interest paid over the life of the loan. For that reason, it is very important that you set out to borrow only as much money as you will need.

2. You know you credit score is bad – but find out how bad:

You already know you have a bad credit score, but it is a good idea anyway at this point to go ahead and run your credit report. You may be surprised at the fact that your score is higher or lower than when you last checked.

3. Note any other details of your credit report:

Note, too, any other details about your credit report that stand out. In particular, make note of any of the negative marks against you as reported in your report. You may be able to explain the reasons for these to your lender, which could help them be more lenient when determining your interest rate.

4. Go after only bad credit second mortgage or home equity lenders:

You will be doing yourself a big favor by skipping over the regular mortgage lenders. Rather, go after loans exclusively from those lenders who consider themselves to be bad credit second mortgage lenders. Find at least 5-7 of them to go after. Make sure you let them know you are interested in an interest-only loan.

5. Shop around relentlessly to land the best rate:

Now, start applying for loans. Be sure to shop relentlessly by following through and applying to multiple lenders. Be sure to aggressively negotiate for the best rates.

Consider these 5 tips for finding a second mortgage through an interest-only bad credit home loan.

Author Bio: Find more tips on how to secure a bad credit home equity loan at: Bad Credit Second Mortgage Approval.

Category: Finances
Keywords: second mortgage interest only bad credit mortgage loan, bad credit home equity loan, mortgage