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Are You Ready for a Home Mortgage Loan?
Buying a Home and committing to a Mortgage can be very scary! A home mortgage loan is the largest debt that most Americans will take on in their lifetime. As such, making the decision to take out a mortgage is not one that most first time...
Home Loans and Mortgages – Beware of Deed Theft Scam
The average home in the United States has a value of $206,000, a record amount. Real estate prices have been rising throughout the country during the last five years, and homeowners have seen the value of their property skyrocket. In California...
Home Mortgage Loans For People With Bad Credit
Getting a home loan with bad credit has actually never been easier than it is today. Here are some tips to help improve your chances of success: Find A Good Real Estate Deal – If you can find a property that has some equity in it when you purchase...
How To Save Thousands On A Mortgage Or Any Other Loan
Interest on the average home mortgage will cost the homeowner nearly TWO TIMES the cost of the home. If you were to purchase a $150,000 home with a $120,000 mortgage (80%), and you paid an interest rate of 9% for 30 years, you will have paid over...
Second Mortgage for Home Improvement
Now that you have been in your home for a few years and you have established some equity, you may be considering doing some home improvement with a second mortgage.
Home improvement comes in many forms. Such as a new kitchen, bathroom, roof,...
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2nd Mortgage - Better Than Refinancing
You have probably received refinancing offers in the mail or advertised online touting your ability to pull out your home’s equity. But a 2nd mortgage, also called an equity loan, may be a better financing option than refinancing your mortgage. 2nd mortgages are ideal when you just want to tap into your equity, plan to move soon, or are unsure about the amount you want to borrow.
Tapping Your Equity
Tapping into your home’s equity is best done through a 2nd mortgage if you already have a low interest loan. Typically, applying for a 2nd mortgage requires fewer fees than refinancing a mortgage. 2nd mortgages are also paid back sooner, so your interest payments are less.
Short-Term Loan
With the costs involved in refinancing, you typically need to keep the loan for about two years to break even. However, with a 2nd mortgage you don’t have those fees to worry about recovering. 2nd mortgages do have minimum balance and early pay off fees, but they are significantly less than refinancing fees.
Flexible Loan Amount
A 2nd mortgage allows you to take out your home’s equity over the course of several years. The money can be accessed with a check, ATM card, or direct deposit, depending on how you set up your account with the lender.
Additionally, you only pay interest on the money that you have withdrawn.
Higher Approval
Lenders tend to be more lenient with approving 2nd mortgages. Since the amount usually is less than a traditional loan, lenders remain confident that they will receive payment. If you have had a few credit glitches in the past two years, think about going with a 2nd mortgage.
2nd Mortgage Mistakes
2nd mortgages aren’t for everyone. You should weigh the cost of PMI and payments when choosing your financing options. Borrowing more than 80% of your home’s value will subject you to private mortgage insurance.
Your monthly payments should also be a factor in your decision. By taking out equity when refinancing your home, you will have a lower payment than if you had both a mortgage and 2nd mortgage payment. Also, if you refinance in the future, you will have to pay off your 2nd mortgage.
About the Author
Carrie Reeder is the owner http://www.abcloanguide.com, an informational website about various types of loans. To view our recommended sources for 2nd mortgage loans online, visit this
page: http://www.abcloanguide.com/mortgageloans.shtml
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