Second Mortgage Is Good For You?
take out a mortgage when they purchase their home. This mortgage is
called a first mortgage. Some have done mortgage refinancing and
have changed their first mortgage to a lower interest rate to lower their monthly payments. Many homeowners also have taken out some type of second mortgage on their home
as well. You may wonder if a second mortgage is good for
are many circumstances where a second mortgage may be taken out by homeowner. Some people may be in need of cash to pay for high medical bills after an
accident or serious illness. Others may want to remodel or add on
to their home and need the money to do so. Generally, the loan
interest rates for a second mortgage are lower than other types of loans, such as just a personal
loan. Thus, this type of loan is appealing to the
homeowner. There are a number of different types of second mortgage
liens as well as mortgage refinance options that may fit well for you. Getting a home equity loan may be a great option because the rates are low and
you can get this type of loan on a revolving line of credit. This
way, you only pay interest on the amount of money you have pulled out to use.
like with a first mortgage, a second mortgage will require paperwork. An appraisal will need to be conducted by a certified appraiser that the
lender chooses. The title will need to be searched for your home by
a title company. There will likely be requirements for income
verification, and closing costs will be incurred. By understanding
what your mortgage refinancing and second mortgage options are, you will be in a much better position to make an
educated decision as to whether this will be good for you or not.
traditional second mortgage uses the equity in your house as collateral. For instance, if your house is currently worth $250,000 and the balance on
your first mortgage loan is $180,000, then you have $70,000 in equity. Typically, if you borrower over 80% of the value of your home, you have to pay
private mortgage insurance each month, which can add quite a bit to your monthly bills. So, you could borrow $30,000 of that equity in the form of a second
mortgage. This mortgage is in addition to your first mortgage, and
the interest rates will often be a little higher because the lender is taking a higher risk to become the 2nd
lien holder on your home. This loan may be an interest only loan or
a fully amortized loan. It is important that you look at how your
payments will work.
credit has gone bad and the only way for you to qualify for a mortgage refinance is to get a bad credit mortgage
loan, it may still be worth your while if the interest rates are low and you can lower your
payment. Do some research and ask your lender any questions you
may have as you determine whether a second mortgage is a good financial move for you.