2nd Mortgage Loans
A second mortgage loan used to carry the stigmata of financial hardship. In these days of low interest rates, second mortgage's are quite common and are an attractive option for many homeowners who need to get a loan in a variety of situations. Let's learn more about the second mortgage and discover why they have become so popular in recent years. A second mortgage is exactly what it sounds like. It is another mortgage against your property, same as the first. The only difference is that in a second mortgage, you can usually only borrow against the amount of equity you have in your home. Equity is the difference between the appraised value of your property and the amount you owe on your first mortgage. In recent years, there has been fierce competition amongst lenders which has resulted in the widespread availability of low rates on all types of loans, second mortgage loans included. Still, second mortgage loan rates do tend to be slightly higher than the rates offered for a primary mortgage. It is a good idea to shop around and compare the rates offered by different lenders before applying for a second mortgage loan. Many times you will find special offers of low fee and no fee second mortgage loans which can help keep closing costs down. Types of 2nd Mortgage LoansThere are essentially three basic types of 2nd mortgage loans. There is the traditional second mortgage loan, the home equity loan and the home equity line of credit. In the first two cases, the amount you are borrowing is paid out to you as a lump sum. In the case of a home equity line of credit (HELOC), you have access to a revolving line of credit that is secured by your home which you can access at will. In the case of the HELOC, you can borrow against this line of credit, pay it off and have it available to borrow against in the future if you should need to. 2nd mortgage loans are useful to homeowners for a multitude of reasons. If you have the need to finance a home improvement project, pay off medical bills, start a business or send your kids to college you might be a perfect candidate for a 2nd mortgage loan. Second mortgage loans are also useful in some situations to avoid mortgage insurance requirements on your first mortgage. Second mortgage loans also offer advantages over mortgage refinance loans. The amount of time and paperwork required to get a second mortgage is minimal compared to what is required for a mortgage refinance. As a homeowner, it is good to know and use these financial arrangements as needed, but always use caution when making such major decisions. Because a 2nd mortgage is secured by your home, if you were to default on the loan the bank would sell your property to pay off the debt. It is also necessary to consider that interest rates change and that low rate you have today may not be so low in another five or ten years. Never borrow more than you can afford and do think towards the future when making these decisions. If you have weighed your options and decided that a 2nd mortgage is right for you, you have a multitude of lenders to choose from. Search the internet and compare special offers and rates from multiple lenders as there are many great deals on second mortgage loans that you can take advantage of. |
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