What is an Alternative Home Equity Loan and how can it help Bad Credit Mortgage Refinancing?
Alternative Home Equity Loans are 1st position mortgage loans that use alternative income documents and have more flexibility for those with credit issues. These alternate income documents include, for example, deposits on bank statements, 1099’s, certified profit and loss statements, or rental income for investment refinancing. Another benefit of Bad Credit Mortgage Loans is that underwriters only look at the last 12 months of financial history in order to verify qualification. This allows the client to avoid disqualification due to issues that may have prevented them from qualifying in the past. This poor credit mortgage loan option is well suited for a self-employed individual that can write off a substantial amount of their income or one that has had a major derogatory credit item in the last 5 years that disqualifies them for a convention or government loan.
What alternative documentation can I use for an Alternative Home Equity Loan?
There are several options you can use to document your income. One option for an individual seeking to use an Alternative Home Equity Loan is a bank statement. A percentage of bank statement deposits can be used depending on the type of business and account the individual is using. Another potential choice is 1099’s or certified profit and loss statements if you are self-employed. For those who own investment properties, you can use the rental income to qualify as long as it’s more than your mortgage payment including taxes and insurance.
What are the benefits of an Alternative Home Equity Loan?
Alternative Home Equity Loans allow borrowers the freedom and flexibility to obtain financing when all other conventional or government options are not available due to problems with the last 12 months’ credit history used for qualifying.
Bad Credit Mortgage Loans can be secured through all types of real estate including owner and non-owner occupied residential. This type of loan can be utilized to facilitate poor credit home refinancing, debt repayment, consolidation, home improvements, renovations, real estate purchases, business start-ups, business expansions and more!
Unlike traditional financing and Private Home Equity Loans, Poor Credit Mortgage Loan transactions offer:
- 30 year fixed option on 1st lien positions
- Fico’s as low as 550
- Derogatory items beyond 12 months don’t affect qualifying
- No prepayment penalty on primary residences
- Cash out for debt consolidation and home improvements
- Loan to value as high as 90% (depending on fico)
- No mortgage insurance
What are the negatives of Alternative Home Equity Loans?
With this option, you will incur a higher interest rate than conventional or government financing however, you will still receive better terms with a poor credit mortgage loan than Private Home Equity loans.
Are there any Prepayment Penalties if I pay off the loan early?
Primary residences have NO prepayment penalty. However, investment properties can incur penalties for payment up to 3 years early. These can be eliminated with additional costs.
What kind of documentation is needed to get started?
- Loan Application which can be taken over the phone in 15 minutes or via this link https://form1003.our220.com/index.php/application/create?domainName=www.timkylelends.com
- Current Mortgage Statement
- Homeowners Insurance Declarations Page
- Driver’s License and Social Security Card – front and back
- Current pay stubs, 2020 and 2019 W2’s (if using to qualify)
- Lease Agreements for all tenants (if using to qualify)
- 12-24 months bank statements (if using to qualify)
- 1099 and/or P&L statements (if using to qualify)