Tips for Getting a Second Mortgage A second mortgage on your home is worth your consideration when you can’t find other possible sources of money for debt consolidation, major home refurbishment or just anything else that incurs significant expense. Second mortgage loans mean that you’ll still be using your house as collateral for the loan. But a second mortgage loan comes with its bucket of risks like possible foreclosure on the second home mortgage and potential financial exposure. It’s therefore important to understand both the drawbacks and the benefits of taking a second loan before making the ultimate decision. About Second Mortgages Second home mortgages can be home equity lines of credit (HELOCs) or home equity loans. The latter is like first mortgage loans and is characterized by a fixed interest rate. This loan also has a fixed repayment money and a fixed term of usually up to 20 years. Once you are given your lump sum loan, you can begin making principal and interest payments generously spread over the loan term. The HELOC, on the other hand, mimics revolving credit in the sense that after being allocated a maximum loan amount of money you can start withdrawing it in bits until it reaches the maximum credit limit. You can only make payments after you have the first withdrawal. Most providers of this loan will also give you the option of fixed or adjustable interest rates. It’s very important that you understand how this type of loan works since you risk losing your home if your monthly payments become a challenge. Now Your Financial Health A recommendation by the Consumer Financial Protection Bureau is that the total monthly home payment of any business or person should be less than 28% of the cumulated monthly income before taxes. The total monthly home or business payment should also be calculated after an inclusion of primary mortgage, secondary mortgages, homeowners insurance, real estate taxes, and any other mandatory fee payable. To be certain of your confidence in repaying your second mortgage loan, you could also import the monthly income payment you had budgeted to an overall budget. The more you are prepared with information, necessary documents and all other things that can help you convince potential lenders that you are worthy of second mortgage loans. The application for short term mortgage loans by many providers includes personal information such as financial history, employment history and identification of all outstanding debts. Know your credit score and a general rate estimate (online calculators can give you a general estimate) since these are critical information that almost every potential lender will require. You should also know the value of your home so that you can calculate your rough equity of the home through Trulia and other programs. Knowing how much your home is worth will also help you in calculating the maximum second mortgage size that you will be given access to. How Do I Find The Right Second Mortgage Lender?
Second mortgage loans can be easily got from the institution that gave the primary mortgage loan.