Second Mortgages – is This a Bad Thing ?
A second mortgage just means that it is the second loan that is secured against your home. This is not a good thing to have as you not only have a lot of debt to pay off, but your home is at risk if you could not pay off your loans completely.
The interest rates are higher on the second loan but the bank charges will be less as there is already a loan registered on your name. To qualify for this loan is much the same as qualifying for the first loan. Your credit history will be checked and you will have to answer a questionnaire about your employment status and your monthly income and expenditure. The money can be paid to you in a lump sum or you can open a line of credit and use the money as you need it.
Very few banks give prospective property buyers a loan for the full purchase price of the property. The balance has to be paid by the buyer in cash. If you did not have a deposit and you discovered the home of your dreams you would want to buy it immediately as the seller would not want to wait for you to first save up a deposit. In a case like this the bank would allow you to take a second mortgage to pay for the deposit. In a case like this it justifies taking a second loan on your home.
The loan can be used for home renovations. There are always repairs and improvements that must be made on the home. The cost of building is very high and it is better to borrow the money and get the jobs done than to put it off while you are saving the money. Before embarking on home improvements, first get quotes from the building companies and building suppliers concerned so that you know what the project will amount to. This will help you budget and not waste any money. The line of credit will work well in this case as you can pay for labor and building material as you need to. The line of credit works much like a credit card.
Lee Van
http://www.articlesbase.com/loans-articles/second-mortgages-is-this-a-bad-thing–89450.html
I have 2 mortgages that I would like to consolidate into one. What the best way to do this? Is it worth it?
I have 2 townhouses. Both are 15yr loans. Both are at 6.25%. One home is probably worth $80K, it was bought for $65K, borrowed $53K and I owe $38K on it with just over 10yrs left. The other home is probably worth $115K, it was bought for $98K borrowed $56K and I owe about $48K on it with 13yrs left.
I want to see if it’s possible to refinance the larger loan, and add $38K to the loan to pay off the smaller house. I want to have ONE mortgage, not take an equity loan and have a second mortgage. Keep things simple and I’m pretty sure it will lower monthly fees.
My credit scores are in the 750 to 800 range and, along with my savings and investments, I’m hoping that would be enough to qualify for a lower rate. I have enough money to pay for the cost of refinancing (I don’t think it’s a good idea to tack that on to the loan if I got the cash). School and property tax together is about 2.21% of the purchase price.
So, what is my best option? It’s really a small loan I know. It was a pain trying to find someone to call me back on $56K loan for my second house. Right now they are both financed with the same bank. Should I go to them? If it means they make less money would they even want to help me?
Most of all, is it even worth it? I’m pretty sure I won’t be moving for at least the next 10 years.
Thanks for any help.
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LikeDislikeSounds like a good idea. If you can get a 4 or 5 percent loan you’ll save considerable money. Shop around and consider your current bank. The only catch is that the property might not be worth as much as you think.
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