|
|
|
|
Understanding a
Second Mortgage
|
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;
irregardless of who the borrower is.
Shorter Terms
Although you will have choices for terms when selecting your second
mortgage, in general the terms given for them are shorter than those
of a first mortgage. This is primarily because the amount of the second
mortgage is generally much lower than that of the first mortgage.
Second mortgage repayment terms can vary considerably, so it is important
that you look around for the one that is best for you. For the most
part they range in length from 2 – 20 years, with the majority of second
mortgage loans being 5 – 10 years.
Just as the length of the second mortgage can vary, so can other repayment
terms. The majority of second mortgages are paid back in equal monthly
payments with a portion of the payment going to interest and a portion
to the principal balance, just like a first mortgage. However, some
are different such as those known as interest only or balloon mortgages.
In that case your monthly payment will go only towards interest and
the entire principal will be due at the end of the second mortgage term.
When considering a second home mortgage, be sure to shop around and
then talk to lenders to ensure that you get the best deal for you!
About The Author:
Peter Dobler is a veteran in the IT business. His passion for experimenting
with new internet marketing strategies leads him to explore new niche
markets.
Read more about his experience with credit and mortgages; visit
Credit
Score Information Directory
Other Credit And Real Estate Related Information
|
American Grant
Provider Directory
 The
Federal Government and Private Grant Foundations issue billions
of dollars in grant money to a variety of groups each year.
Grants are awarded to individuals each and every day from all
walks of life, with large and very small bank accounts, for
an ever-increasing array of purposes.
Grant programs are not Loans.
You decide how much you need. As long as the amount is lawful
and you meet the Foundations and Government Agencies Requirements,
the money is yours to keep and never needs to be repaid. This
grant money is non-taxable and interest-free!
Get more information
|
|
Do You Have
Bad Credit?
Don't give up!!
Our list of lenders and credit card
companies are willing to give you another shot. They realize
that good people can have bad credit.
Whether you have
had minor problems in the past or even bankruptcy, our lenders
are there to help you not only receive a loan, but also to re-establish
your credit.
Are you ready to
get your second chance?
Get more information
|
|
Mortgage Loan Tips
 "Excellent
for first time buyers, move-up buyers or refinancing. I cannot
recommend it highly enough - this should be required reading
for anyone who wants to get a loan."
M. Klinger, Real Estate Broker
Aventura, FL
Get more information
|
|
Credit Repair
- Erase Bad Credit Now!
 Are
you tired of Bad Credit? - High Interest Rates? Disapproved
Credit?
Use my experience today, and I will show you
how to get every negative item Removed from your Credit Reports
within 1-3 Months. Guaranteed!
Get more information
|
|
Credit Secrets
 "How
to Clean Up your Credit Report and Wipe All Your Credit Card
Debts in Record Time!"
Take a moment to imagine this...
On any given day you could be receiving new pre-approved credit
card offers in the mail, you could able to purchase a new home
without worrying about qualifying for a mortgage, financing
for automobiles and boats could be readily available to you,
and...you could have piece of mind knowing that should an emergency
arrive you would have the resources to take care of you and
your family.
Get more information
|
|
