Understanding A Second Mortgage
by: Norman Fleming
A Second Mortgage is a Property Lien placed behind a First Mortgage
A second mortgage is a loan that you take against the equity that you have already built into your home by paying off some of the principal balance on your first mortgage loan.
Historically the total amount of debt from the first and second mortgage combined could not be more than 80% of the total market value of the home. However, record low interest rates and a competitive lenders marketplace have created a lending environment where some lenders are approving second mortgages that, when combined with first mortgage balance, is totaling as high as 130% of the home value.
However, financial advisors will tell you that carrying that much debt on your home is never a good idea.
Because a second mortgage is a property lien that is placed behind the first mortgage, this means that in the event of a default, after the property is sold the first mortgage gets paid in its entirety, including any legal costs and other costs of the sale, before the second mortgage can be paid. If there is not enough money from the sale of the home, the second mortgage does not get paid.
A Higher Interest Rate
When determining the interest rate that a lender is willing to loan money out for a home mortgage, he looks at the risk level to him for loaning that money. This is the reason that a high risk borrower with a poor credit history gets charged a higher interest rate than a low risk borrower with a strong credit history.
The same theory holds true with a second mortgage. Because the lender of the second mortgage is second to be paid off in the event of a default, and because there is a greater chance that there might not be enough equity in the home to pay off the second mortgage in full, second mortgages are usually given at a higher interest rate than are first mortgages
About The Author
Norman Fleming This article provided courtesy of http://www.quickbooks-guide.net
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HELOCs and Second Mortgages: Which One Should I Choose?
HELOCs and Second Mortgages: Which One Should I Choose?
by: Mark Lambie
Whether you need some extra cash to pay off some credit card debts, or to make some home improvements, home equity lines of credit or second mortgages can be great ways to get started.
Many people looking to borrow money often opt for home equity line of credit, or HELOCs, for short.
They are a tempting first choice, because they can often give you the much needed cash at a low interest rate.
Another advantage to taking out an HELOC, or a home equity line of credit, is that they may provide the borrower with a certain tax break, but you would need to verify this with your lender or accountant.
One drawback to HELOCs, however, is the fact that borrowers are expected to put their homes up as collateral.
So, it is important that you think this decision through, before finalizing the loan, because you may be at risk of losing your home-...
Mortgages > HELOCs and Second Mortgages: Which One Should I Choose?
Home Loan Refinancing ? When Do You Have To Close?
Home Loan Refinancing ? When Do You Have To Close?
by: Carrie Reeder
Refinanced mortgages have a couple of different rules when it comes to closing. For one, there is a mandatory rescission clause for primary residence mortgages that allows you annul your loan. You can also choose to close at anytime, which is beneficial if you think rates will drop in the near future.
Rescission Clause
With a rescission clause, you have three days after closing to cancel your loan if the property is your primary residence. Think of it as a ?cooling off? period. If you have second thoughts, you can annul the loan and recoup nearly all the fees.
Most often this clause comes in handy when homeowners are deciding to tap into their home?s equity, but then change their minds. Other times, a change in job situation or home plans makes the refinanced mortgage unnecessary.
Once you have annulled your mortgage, you will only have a short term hit on your...
Home Loan Refinancing ? When Do You Have To Close?
Mortgages > Home Loan Refinancing ? When Do You Have To Close?
A Look at Common Types of Loans
A Look at Common Types of Loans
by: John Mussi
People sometimes wonder about common types of loans, especially with all of the different types of loans available.
There are many common types of loans that may fall into the same categories, as well as some common types of loans that are only different in one or two small ways.
Below are the descriptions for several common types of loans, including some of the factors that may restrict who is eligible for the loan and how much interest different individuals might have to pay for the loan.
Of course, this doesn't cover all of the loans that are offered? only the loans that you are most likely to encounter.
Secured and Unsecured Loans
Most if not all common types of loans fall into one of two categories? secured loans and unsecured loans.
Secured loans are those loans that use some object of value, which is referred to as collateral, as a guarantee of repayment...
A Look at Common Types of Loans
Mortgages > A Look at Common Types of Loans
Consider Different Reverse Mortgage Options
Consider Different Reverse Mortgage Options
by: Charles Kirkendall
There are many different reverse mortgage options: single purpose reverse mortgages, federally insured reverse mortgages, and proprietary (private sector) reverse mortgages.
Each option has different pros and cons that need to be considered when looking into taken out a reverse mortgage.
Single-Purpose Reverse Mortgages
A single purpose reverse mortgage is the lowest-cost type of reverse mortgages to obtain, but as the name indicates it can only be used for one specified purpose.
They are typically offered by state or local government agencies.
These loans a great for individuals who need cash for a specific purpose like paying property taxes or fixing up there homes.
Here are descriptions for several different types of single purpose reverse mortgages:
Property tax deferral (PTD) mortgages are reverse mortgages that...
Consider Different Reverse Mortgage Options
Mortgages > Consider Different Reverse Mortgage Options