Good Credit Score

• Like any other type of mortgage or loan, getting a second mortgage requires a fair or good credit rating. Credit scores range from 300 to 850. The minimum fair or acceptable credit score for a loan ranges between 650 and 680, and borrowers who fall within these numbers are usually able to acquire an approval. Of course, a score above a lender's minimum helps lower the interest rate on a second mortgage. A cheaper rate equals a lower payment on the mortgage. Paying your first mortgage on time each month and other debts as well helps build a higher credit rating.
  
  

Adequate Income

• Credit ratings aren't the only basis for acquiring a second mortgage. Lenders will reject your application if your income can't afford another monthly expense. Second mortgages create another bill and increase your monthly expenses. If you can barely afford your first mortgage and other expenses, a second mortgage may not be right for you. Home equity loans and home equity lines of credit place a second lien on your property. And if you default on the second mortgage, the lender who issues the loan can foreclose on your home. Lenders will review your income and expenses to determine if you qualify for a second mortgage.
  
  

How Much Equity in Your Home?

• Because second mortgages borrow money from your equity, you need equity to qualify for such a loan. Equity is the difference between what you owe on your mortgage loan and the appraised value of your home. Based on your equity, lenders will allow you to borrow up to a certain percentage--usually up to 80 percent. For example, if you have $100,000 equity in your home, you may qualify for a second mortgage up to $80,000. Appraisals assess the value of your property.
  
  

Comparing Loan Offers

• To keep your rate and payment manageable on a second mortgage, shop around and get quotes from a few mortgage lenders. Free quotes provide information on the second mortgage such as the interest rate on the loan, the monthly payment, closing fees and other terms. Side by side comparisons are the best way to review loan quotes and choose the cheapest offer.