Mortgage second

Second Mortgage: How do you even qualify?

admin — Sat, 30 Jan 2010 21:12:03 +0000

When you think about a second mortgage, what do you think of first? Which aspects of a second mortgage are important, which are essential, and which ones can you take or leave? You be the judge.

Great news! You qualify for a second mortgage. Now what would you like to do with the second mortgage? It will be your answer to this question that determines whether or not your second mortgage is your friend, or your foe. That seems to be an awfully strange way to look in a second mortgage; however that’s exactly what the mortgage will be. Your friend or your foe.

How do you even qualify for a second mortgage, what is a second mortgage, and why would you want a second mortgage? Well, the answers here are as varied as the consumers who apply for such mortgages. Many times consumers need a second mortgage to make improvements on their home. Many times consumers need a second mortgage to put their child to college. And sometimes, consumers need a second mortgage to start a business. The reasons given here for obtaining a second mortgage increase the value of the home, provide opportunity as an investment in your child’s future, or provide the opportunity to increase income. These are the original and most beneficial reasons for obtaining a second mortgage.

Are they the only reasons consumers obtain second mortgages? No. Today’s market has been a great influx of second mortgages to pay off credit card debt, to buy new car, or to simply take a vacation. Should consumers receive a second mortgage for those reasons? Absolutely. Should consumers actually ask for a second mortgage for those reasons? Absolutely not.

If you find yourself confused by what you’ve read to this point, don’t despair. Everything should be crystal clear by the time you finish.

An educated consumer understands the consequence of a second mortgage. The educated consumer understands the price of the second mortgage. What is the price of the second mortgage? The equity in your home. When you apply for a second mortgage, you’re trading the equity in your home for cash. You’re giving up your savings.

If you’re trading your savings, in order take a step up, you’ve made the right decision. If you’re trading your savings for a frivolous expense, you’ve made the wrong decision. That’s how you determine if your second mortgage is your friend or your foe.

Today’s consumer is acquiring second mortgages that for many will prove to be their foe. They’re not increasing the value of the home; they’re not educating their children. Nor are they increasing their income earning potential, they’re simply spending their savings. Rising real estate prices, increasing availability of mortgage products, and the decline of savings for the public as a whole is creating the “bubble” effect. The bubble effect occurs when prices rise, spending rises, at a rate greater than can be supported on a long-term basis. At some point, the bubble bursts.

Your second mortgage, if used to increase the value of your home, will have insulated you against the drop in price. Your home is actually worth more; therefore, if prices drop you’re protected. This was the original intent of the second mortgage; to provide the consumer with easy access to the savings accumulated in their home for home improvements, emergency events, or in order to better their homes or lives. You know for the most part consumers do not save money in a savings account; consumers only save money when they aren’t aware that they’re saving money. Home equity was one of the last hidden ways consumers were saving. Second mortgages and other loan mortgage products have managed to eliminate those savings as well. Has the consumer stop to contemplate the consequence of negative saving? Absolutely not, and our current system of mortgage lending encourages negative savings.

There’s a lot to understand about a second mortgage. We were able to provide you with some of the facts above, but there is still plenty more to read about in in our article directory.

By: Hans Hasselfors

Using an 80 20 Mortgage to Avoid Mortgage Insurance

admin — Fri, 29 Jan 2010 18:22:57 +0000

An 80 20 mortgage is also called a zero down loan or no money down loan. It is actually two loans, a regular home mortgage which constitutes 80% of the price of the home and a second mortgage or home equity loan that consists of 20% of the cost of the house. The idea behind this type of loan is avoiding mortgage insurance (PMI) by using the home equity loan as the down payment.

Just about all mortgages require some form of mortgage insurance if you are unable to make a down payment of at least 20 percent. By obtaining a second mortgage or home equity loan for 20 percent of the homes cost you can circumnavigate this requirement by using that second loan as the down payment.

There are variations of this type of mortgage such as an 80-15-5 loan. This means that the borrower got a main mortgage of 80 percent of a home’s purchase price, a piggyback loan for 15 percent, and made a 5-percent down payment. This can be a good option if you have some money for a down payment but not enough to cover the entire 20%.

The second mortgage can either be a fixed second mortgage or it can be a line of credit. If it is a fixed second mortgage then the interest rate is normally fixed for the entire length of the mortgage. Most fixed second mortgages are a 30 due in 15 which means that the second mortgage is amortized over 30 years, but is due in 15 years. The benefit of going with the line of credit as the second mortgage is that the interest rate is normally much lower than the fixed second mortgages rate. They can also be an interest only loan which could save you hundreds of dollars in mortgage payments every month.

The 80 percent first mortgage can be a fixed-rate (15-year or 30-year), adjustable-rate (usually 5/1, 7/1 or 10/1fixed period ARM) or interest-only loan. Typically, the interest rate on the second mortgage loan is higher than the interest rate of the first loan. But because the borrower doesn’t have to pay mortgage insurance, the overall cost is less than a traditional mortgage even with the higher mortgage interest rate on the second loan.

Plenty of mortgage programs allow borrowers to buy houses with little or no money down, but they usually require private mortgage insurance, or PMI. Getting an 80 20 mortgage can be a good way to avoid the extra cost that PMI will add to your monthly payments.

By: Andrew Bicknell

Looking For A Second Mortgage Loan?

admin — Fri, 29 Jan 2010 11:35:39 +0000

A second mortgage loan is a subsequent loan and subordinate to the earlier mortgage. In other words, a second mortgage loan is used as collateral pledged for the first loan.

Length of Second Mortgage Loans

Second mortgage loans have varying lengths with which they are eventually paid off. Some second mortgage loans may last for as long as 15 or 20 years. Other second mortgage loans only require one year for repayment.

When you’re thinking of taking on a second mortgage loan, you will need to know what term best suits you. Discuss the repayment terms of the second mortgage loan with your bank or lending company. For instance, you get a second mortgage loan worth $20,000 to make some home repairs. With this amount, you might want to take on a second mortgage loan that will allow you to repay the entire amount in one or two years. If you pay a second mortgage loan that has a shorter term, the monthly payments may be too high.

Payment Calculations for Second Mortgage Loans

Before taking on second mortgage loan, be sure that you understand a couple of things first. Know how much your monthly payments will be for that second mortgage loan. Moreover, it is also helpful if you also have an idea as to where those second mortgage loan payments will cover.

Some second mortgage loans require you to make monthly payments on both interest and principal. Other second mortgage loans only require you to pay the interest of the borrowed amount.

The former type of second mortgage loans will allow you to significantly shorten your payoff period since with each payment you make, you are also chipping away at the principal. With the interest-only second mortgage loan however you will be required to pay back the entire amount that you borrowed as soon as the term ends. This type of second mortgage loan is also called balloon payment loans.

Second Mortgage Loan Costs

Fees may be charged by some lending companies for the money you borrow on second mortgage loans. The fees, referred to as “points,” are usually a percentage of the second mortgage loan. One point on your second mortgage loan is equivalent to one percent of the amount you borrow.

So, if you were to get a second mortgage loan of $10,000 with an eight-point fee, then you would have to pay $800 in “points.” Second mortgage loan companies may charge you in varying number of points so if it might be helpful if you do a comparison first.

Second Mortgage Loan Rates

Second mortgage loans have different payments plans. Most second mortgage loans have a fixed rate payment included in their payment plans. If you have a fixed rate second mortgage loan, the interest rate will be set for the whole loan term. This means that your monthly payments for your second mortgage loan will not be affected by any outside changes.

Some companies also offer second mortgage loans with variable rate payments. These variable rate second mortgage loans periodically experience rate adjustments. A variable rate second mortgage loan might be cheaper than a fixed rate payment in the long run. But this is only provided if the interest rates of second mortgage loans go down. If interest rates rise, then your monthly payments for your second mortgage loan will rise as well.

By: Lorna Mclaren

Why You Should Opt For Bad Credit Debt Consolidation Mortgage

admin — Thu, 28 Jan 2010 11:34:50 +0000

Bad credit debt consolidation mortgage can be an option worth considering when you have debt spiraling out of control as well as a poor credit history. Most of us only realize how badly in debt we are only when we face the huge pile of unpaid bills with high interest rates and penalties that give us sleepless nights. Instead of tossing and turning, the best thing is to take some constructive action that can pave the way for a better, debt-free future. The future can look bleak especially if you have a credit profile that is not very good.

Tips To Improve Your Credit Profile

It can be bad enough to have a poor credit profile but when you add mounting debts and not sufficient income to repay them, it is time you considered the options available that can get you out of the soup. The first thing you can do is to get a clear picture of just how bad the situation is. You need to write down all income and carefully list your expenses, and then write down the debt you owe, to whom you owe it and how much interest you pay. If you are a home owner, you are in luck, as you can use your home to resolve your financial bind. Second mortgage debt consolidation may be the solution you are seeking. There are many firms that offer debt consolidation loans to people with bad credit. You need to determine the current market value of your property and determine what its equity is.

You can get online and look up a few dependable and reputable firms that offer bad credit debt consolidation mortgage services. You can opt to refinance your home or get a second mortgage or opt for a HELOC (home equity line of credit). The main advantage of consolidation is that you get to make single payment each month and you get lower interest rates. You have to negotiate a deal that works in your favor, giving you affordable EMIs and a longer tenure if desired. You just need to be very cautious as defaulting on payments can result in your losing your home.

It is recommended that you compare rates and terms offered by a few firms that offer such services. Check out if there are any complains registered against the firm with the BBB and read client testimonials if available. Once you have determined which firm is reliable and offers you the better deal you can negotiate a deal that will ensure you get affordable EMIs. When you make payments regularly to debt consolidation mortgage loan company,you will not only be reducing your debt but also be improving your credit profile.

By: Apurva Shree

Understanding Second Mortgages and Home Equity Loans

admin — Thu, 28 Jan 2010 00:14:24 +0000

There are many benefits to buying a house rather than renting. Many people would argue that renting a property essentially creates ‘dead money’, in that the money for all intents and purposes vanishes into thin air.

Contrary to this, those who choose to buy their own home – if all goes well – will see a gradual increase in their property’s equity over a number of years, as a result of them paying their mortgage off month by month. In some cases, the equity can rise rather rapidly if a number of factors combine forces.

If a homeowner is shrewd with their money and pays off more than they are obliged too, then not only does the mortgage decrease, but the amount they are paying on interest should decrease too, assuming interest rates don’t increase. Additionally, if an area experiences an unexpected boom, perhaps due to unforeseen development work in the neighbourhood, then this can see local house prices go through the roof, so to speak.

When both the above factors occur in tandem, then the equity in a home can rise considerably in a relatively short period of time, meaning homeowners can often be sitting on mini goldmines.

Many people choose to unlock the equity in their home rather than opting to profit immediately through selling it on. The most convenient way of doing this is by going down the home remortgage route. The funds raised from this can then be reinvested back into the home, with a new conservatory, patio, garage or kitchen serving to increase the value of the home even more.

Of course, any funds acquired through taking out a second mortgage don’t necessarily have to be invested back in the home – they can be used to buy a new car, consolidate existing loans or even go on holiday. Second mortgages may have a fixed or variable rate of interest and will normally constitute borrowing a lump sum amount. As with a first mortgage, it will need to be paid back over a pre-established period of time.

One alternative to taking out a second mortgage would be to opt for a home equity loan (HEL) instead. Similar to a second mortgage, the funds are secured against the value of the property. However, a home equity loan is perhaps more similar to a credit card in that an approved line of credit is given up to a certain amount of money. Furthermore, it may even come with a credit card so that money can be spent against the credit.

Which option is best really depends on the circumstances. For a remodel or a renovation, then a second mortgage may be the best choice, as it’s easier to have an idea of exactly how much money will be needed. In situations where the actual amount of money required isn’t clear, then a home equity loan may be the answer.

By: Adam Singleton

Second Mortgages in Canada: When & How?

admin — Wed, 27 Jan 2010 17:57:06 +0000

A second mortgage is a loan you get in addition to the first mortgage that you have already registered for your home.

Second mortgage rates are generally higher because second mortgages are relatively riskier for the lenders. In order for you to understand why it is so, and decide whether or not a certain second mortgage rate is reasonable, let’s have an example of a second mortgage.

Imagine the value of your home in Canada is $350,000 and you have already got a $200,000 mortgage for your home through a mortgage company In Canada. The remaining will be $150,000 ($350,000 minus $200,000). This is your home equity. In other words, this is the part of your home value that you have not received a mortgage for. Therefore, you don’t owe this much of your home value to a mortgage company.

Now imagine that you need $100,000 for a reason. Because your home equity is $150,000, you can then ask for a $100,000 loan, which is less than $150,000. This new amount that you get as a loan is called a 2nd mortgage. Sometimes second mortgage might be also called home equity line of credit or home equity loan, but they are second mortgages if they are taken in addition to your first mortgage.

In Canada, in order to get a better interest rate, your second mortgage must be insured and the mortgage default insurance premium will be then added on top of your basic loan amount. Although it may first seem that the amount of your second mortgage has been increased, you will usually have lower rates for you mortgage with lower monthly payments when you insure your second mortgage.

In a fixed rate mortgage, as the name suggests, the interest rate for your mortgage is fixed for an appointed period of time which in Canada is usually between 6 months to 25 years. The good thing about a second mortgage with a fixed rate is that you know how much you are paying for a set period of time which is technically called ‘term’.

In contrast, you may want to go for a second mortgage with a variable rate. This means that the fluctuation in the interest rate will determine how much your monthly payment will be appointed for the principle of your mortgage and what portion to be appointed for the interest. If interest rates go down, more of your payment will help reduce the principal of your second mortgage; if rates go up, a larger portion of your monthly payment will be appointed to cover the interest rather than the principle. Although interest rates may fluctuate from month to month depending on market conditions in Canada, the payments of your second mortgage are fixed for a period of one to two years.

Because second mortgage rates, and generally mortgage rates, change quite frequently, you many want to choose a longer-term mortgage if you don’t want to involve yourself with the rate changes. But if you want to choose a more flexible option, a shorter-term mortgage then allows you to potentially take advantage of lower rates.

By: Arash Svd

What is a Second Mortgage, and How Can I Profit From It?

admin — Tue, 26 Jan 2010 23:43:48 +0000

So what is a second mortgage? A second mortgage is a secured loan (or mortgage) that is subordinate to another loan against the same property. More specifically, the second loan in sequence. In real estate, a property can have multiple loans against it. The loan which is registered with county or city registry first is called the first mortgage. The loan registered second is called the second mortgage. A property can have a third or even fourth mortgage, but those are rarer. Second mortgages are called subordinate because, if the loan goes into default, the first mortgage gets paid off first before the second mortgage gets any money. Thus, second mortgages are riskier for the lender, who generally charges a higher interest rate.

How can you benefit from a second mortgage? Well you can use the money gained from the second mortgage to do any number of things. You can put the money toward paying off various debts including credit cards, car loans, boat loans, school loans, or other types of loans. You can use the money to purchase a new car, boat, go on a vacation. Many people use the money to do home remodels…adding on to the existing house, upgrading the kitchen, put in a pool. All these things are very helpful, and it’s up to you to decide what to do with your money.

How do you get a second mortgage? You get a second mortgage first by owning a house. If you don’t own a house, you won’t be able to get a second mortgage. If you have equity in your house, i.e. your house is worth more than you own on your first mortgage. You can get a second mortgage. In many cases you can get a second mortgage up to the value of the house. The best thing to do when getting a second mortgage is to get quotes. Quotes offer you the ability to “window shop” various rates. With a better rate, you will save more money on your second mortgage. Many quotes are good faith estimates and don’t require a credit check. If you like what a lender is offering in terms of rate and packages, you can choose to go with a lender at which time they will run your credit and tailor the loan package specifically for you.

Where can I get a rate quote? There are lots of places to get a rate quote. Local banks, lending companies, even online there are tons of sites that offer rate quotes. Although be warned…some sites out there will sell your information…so be sure to read the privacy policy before you fill in your information. One great place to get information on quotes and second mortgages is www mortgage refinance second.com. They offer some good advice and even offer rate quotes. But by shopping around for rate quotes, you will greatly magnify the possibility of getting a great deal and it will save you tons of money.

By: Tim Smith

The Second Mortgage Home Equity Loan

admin — Tue, 26 Jan 2010 14:16:54 +0000

A second mortgage can also be referred to as a home equity loan. It is in essence a secured loan that is second, or subordinate, to the first mortgage against the property. The key issue for anyone getting this type of loan is the amount of equity they have in their home. This will ultimately determine the amount of money that can be secured for the home owners use.

Equity is the amount of money that is paid down on the home, or it can be the value of the home minus any loans owed on the home. The main reason for taking out a second mortgage is to take equity from your home and turn it into cash in pocket. What this means is that if you have enough equity in your home you can borrow money using your home as collateral. There are three basic types of loans to choose from: the traditional second mortgage, a home equity loan, or a home equity line of credit.

A second mortgage should not be confused with a mortgage refinance or re-mortgage. When you refinance your first mortgage you are replacing your old loan with a new loan, usually at a better interest rate. A second mortgage, or home equity loan, is another loan in addition to the primary loan, which will result in two monthly payments. It is important to distinguish the two to make sure that two payments will not seriously affect your monthly budget.

The interest paid on a second mortgage, up to the first $100,000 borrowed, is tax deductible provided that the loan is on your primary residence. It should be noted that interest rates on home equity loans are generally higher than a first mortgage, usually in the 2-4% higher range. But the interest rate on a this type of secured loan will be lower then on an unsecured loan, such as a car loan, and much, much lower then you will find on a credit card.

The common reasons to get a home equity loan are to pay off high interest credit cards or other higher interest rate debts, refurbishing the home, urgent family matters such as education, medical, etc. This is called debt consolidation and refinancing and is a good way to tap the asset value of your home to meet your investment and budget needs, and helps you avoid incurring high interest unsecured debt like credit cards. If you have extensive credit card debt, and are not making progress in paying it off on a monthly schedule, a second mortgage may be a good move.

There are a couple of things that anyone getting a home equity second mortgage should be aware of. A second mortgage puts a second charge on your home, meaning that the second mortgage provider can take a share of any proceeds if your home has to be sold. What is worse, if you pay the first mortgage but fail to pay the second, that mortgage provider can seize your home, even if the sum involved is relatively small.

Getting a second mortgage home equity loan can be a good way to use the equity in your home to do any number of things. Like all financial decisions using a second home loan should be carefully considered in all aspects. If it makes sense and fits within the monthly budget then it is something to be strongly considered.

By: Andrew Bicknell

Benefits Of A Second Mortgage

admin — Sun, 24 Jan 2010 19:50:07 +0000

Many people have heard the term second mortgage used in reference to a loan on a home.

What does the term “second mortgage” really mean? As far as real estate is concerned, a single piece of property can have multiple loans, or mortgages against it.

The loan that is first registered with the county or city is known as the first mortgage. The loan that is registered second is known as the second mortgage.

This has many benefits over a normal bank loan.

There can be as many mortgages on a property as there are lenders willing to provide funds.

If a loan happens to go into default, the loans are repaid in the order they were registered.

So, the first mortgage is paid first, the second mortgage is paid second, and so on. Because of this, subsequent mortgages are more of a risk for the lender.

In exchange for assuming the risk of lending a second mortgage, lenders often charge higher interest rates.

In many cases, the second mortgage has a shorter term than that of the first mortgage. Also present with many second mortgages are fixed amortization schedules and balloon payments.

Homeowners have many reasons for taking out a second mortgage. Some of the most common reasons are for home improvement, increasing cash, paying off other debts, or investing in a business.

In some cases, the second mortgage is used as a down payment for the first mortgage when the home is purchased.

When you are choosing a lender for a second mortgage, you will use many of the same considerations that came into play for your first mortgage.

The interest rate, repayment terms, and fees associated with the second mortgage are some of the primary factors that might cause you to choose one lender over another.

The repayment terms are another factor that you should use to determine a lender for a second mortgage.

Some second mortgage loans can be repaid in as much as 15 or 20 years. However, some loans must be repaid within a year.

Generally, the shorter the repayment period on the second mortgage, the higher the monthly payments will be. You should choose a loan with repayment schedule that falls in line with your ability to repay.

To obtain the loan, you will usually have to pay a fee that is a percentage of the loan. Your lender may refer to this percentage as “points”.

One point is equivalent to one percent of the amount that you borrow. Therefore, if you borrow $10,000 with five points as the fee, then you would pay $500 (5%) in points.

The number of points changed will vary by lender. This is where shopping around will pay off for you.

In some states, there is a limit to the amount of points a lender can charge for a second mortgage.

Check with a banking commissioner or state consumer protection office to find out if there is such a limit in your state.

Make certain that you get the amount of the fee in writing from the lender before taking the loan.

By: Gerald Mason

Second Mortgages – Caution – How not to Get Taken

admin — Sat, 23 Jan 2010 10:56:35 +0000

Second mortgages are often a financially sound way of handling excess debt, especially in this times of hard credit. Second mortgages can help you pay of expensive credit card debts, consolidate your debt and make payment easier. You can also renegotiate the terms of second mortgages. A few things to watch out for when applying for second mortgages are:

1. Second mortgages lenders may offer you an incredible deal, extremely low interest rates, or a deal which looks to good to be true – if it does then it probably is.

Where rates offered are much lower than current rates then you can be sure that you are dealing with adjustable second mortgages rates and you can be sure that when the rate adjusts you’re going to be in for a major shock.

2. Second mortgages lenders may encourages you to exaggerate your income for the application for second mortgages or falsify the loan application

If you need to falsify info chances are you can’t really afford the amount you’re trying to lend. Remember that most lenders work on a commission basis and they’re watching out for their own bottom line first not yours.

3. Never, EVER, sign a blank form when applying for second mortgages A lender should never ask you to sign a blank document.

In fact, never ever sign a blank document, period. A document can be as good as signing a blank cheque on your cheque account. Never do it. There are plenty of lenders out there looking for your business.

4. The second mortgages lender pressures you to sign for second mortgages with bad credit If the lender pressures you to sign even though you’ve expressed reservations or puts sales pressure on you then back away.

Always take your time to make sure that you are getting the best second mortgages deal for you and never sign a document unless you’re one hundred percent sure.

5. Promises not kept. Where a lender makes promises but make excuses where it comes to making those promises in writing then get out.

If they won’t put it in writing then you can sure that they won’t do what ever they’re promising

6. Arbitration

Where contracts for second mortgages has an arbitration clause then know that if you sign that contract you are giving up your legal recourse to the courts. IF you have to sign that can kind of document then make sure the Arbitrator is from an accredited association.

For more information please visit http://www.low-interest-second-mortgage-rates.com for more information

By: Brigitta Schwulst