2nd Mortgage
Many people are taking advantage of today’s historically
low interest rates to take out a 2nd Mortgage on their homes to
consolidate debts, make home improvements, or to simply take a much needed
vacation
Second Mortgages are very similar to first mortgages in
that they are a loan secured against the equity of your home. They are usually
a lump sum loan, where you make set monthly payments for an agreed upon period
of time, although some loans give you the option of receiving the money as a
line of credit instead. The loans can last anywhere from one to twenty years
and they typically have a fixed interest rate, although this is usually
slightly higher than the current rates of a first mortgage loan. Not unlike
other loans, interest rates are determined by a number of factors including:
- Your Credit score – the better your credit score is
the more likely you are to secure the best interest rates
- The loan amount – Lower loan amounts are a lower risk
to the lenders
- The amount of equity remaining in your home after the
loan is made – The more equity you have leftover, the more likely you are to
pay back the loan
Second mortgages are getting more and more appealing
because they can provide a large quantity of money and a low interest rates.
Its becoming more common for people to consolidate their credit card, car
loans, and other debts into a low-interest 2nd mortgage so that
they can make one, easy monthly payment and save hundreds, if not thousands,
in interest over the life of the loan. And, not only are people saving money
on their interest rates, most 2nd mortgage interest is even tax
deductible!
In addition to being able to consolidate debt, many
borrowers are using their untapped home equity to purchase, cars, boats, and
vacations, doing home improvement projects that further increase the value
(and equity!) of their home such as putting in a swimming pool, remodeling
their kitchen, or adding a garage, paying for college tuition, or even
purchasing a second vacation home or rental property.
Of course
anytime that you are borrowing money there are some pitfalls to avoid. Many
people that use a 2nd mortgage or home equity loan to consolidate
debt never learn their lesson. As soon as they free up the extra money every
month they run right out and apply for more credit. Now, they are not only
still in debt but they have put their home up as collateral and, now, if they
fall behind in their payments they could lose their home.
Follow the links below for the descriptions
of each of the different types of mortgages:
Fixed Rate Loans
Adjustable Rate Loans
VA Loans
FHA Loans
Balloon Loans
Convertible Mortgage Loans
Negative Amortization Loans
Graduated Payment Mortgages
Buy-Down Mortgage
Jumbo Loans
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