Sub-Prime Debt Consolidation Loans for First-Time Homeowners

It is said that credit problems such as arrears, bad debts, late payments, individual voluntary arrangements (IVAs), former bankruptcy, and County Court Judgments (CCJs) will mean that one in four people will have problems obtaining credit from traditional mortgage lenders. If you are self-employed or running your own business, you may find it hard to obtain a loan, even if you have a good credit history, especially if you haven't been in business for long and are unable to provide three years' worth of business accounts to prove your income. If any of these scenarios describe you, you need to find a mortgage lender that works with non-prime credit to refinance high-rate credit cards under a sub-prime debt consolidation loan.

Many people think that debt consolidation lenders will not let a first-time homeowner secure loans for debt consolidation, especially one with damaged credit or an unpredictable income. But, that's not true. First-time homeowners can also benefit from debt consolidation loans for bill consolidation and secured debt consolidation including auto loans and home equity loans (second mortgages), even if they don't meet traditional underwriting requirements.

Consolidating revolving debt to pay off credit card debt will not only let you save money with lowered interest rates and lower payments, it will also raise your FICO credit scores. According to myFICO.com, paying down your credit cards by 34% could raise your FICO scores by 20 points. Imagine how much your scores would rise if you paid them entirely. Just don't close the accounts. myFICO.com indicates that credit history makes up 15% of your scores. Closing accounts makes your credit history appear shorter, and your debt ratio appears higher, which can hurt your scores.

Similar to other refinance and debt consolidation loans, sub-prime lenders offer fixed rate consolidation loans, adjustable rate loans and 2nd mortgages. Secured debt consolidation is an excellent way to refinance high-rate credit cards, personal loans and other debts into one, easy-to-manage payment.

If the rates on your 1st mortgage are low, fixed-rate debt refinancing or any other mortgage refinance may not be financially prudent. But, you can still enjoy the results of lowering monthly payments and improving FICO scores by consolidating your bills with a second mortgage. Speak with your lender to determine the best solution for your needs.