If you are considering applying for a second mortgage, it helps to know what your lender will be asking for when you come face to face with him.  You can put your best foot forward and get a win-win deal if you gear yourself up with this information.

What does your lender want to know?

Your Income – This is to verify the amount of your income, so be ready with your most recent W-2 form and current pay stubs.

Your Credit History – Lenders will need to see a copy of your current credit report from one or more of the three main credit tracking companies: Experian, Equifax, or TransUnion for them to know if you are a good debt risk.  You will likely have a problem being approved if your current debt ratio is larger than the value of your home.  But you will have just overcome a big obstacle  if you prove yourself a good debt risk with a good credit record and a low rate of debt.

Loan vs. The Value of Your Home – The actual worth of your home will also be taken into consideration by your lender.  The total of both mortgages needs to amount to no more than the current value of your house since your home will be the collateral to guarantee repayment of your loan.  Through this, if ever you default on your loans, both your original mortgage holder and your home equity lender can recoup their losses by selling your home.