A second mortgage is a fixed rate, simple interest instalment loan which is a lien on your property title behind your existing mortgage.A second mortgage loan allows you take equity out of your home without the need of refinancing your current mortgage.A second mortgage loan can help you consolidate your high interest debt which can provide several benefits such as lower combined monthly payments, changing combined interest into a simple interest mortgage and changing the interest on debt payments into a new tax deduction.
Home owners who have little or no equity may be able to get a second mortgage that exceeds the appraised home value. However, a good credit is the key to getting a high loan to value program.The interest rates are influenced by a number of loan factors such as credit scores,the amount of the mortgage, debt to income ratio, your disposable income and the value of your home.
Payment terms are usually offered in 5 year increments, which can range from 5 to 20 years.The application process for a second mortgage loan is easy and painless because the lenders have an easy way of computing how much you can borrow and rate and terms of the loan amount.Generally, the lender will appraise of your property and check your credit history and income status.Even though, the paper work seems to be easy and not a taxing one, be prepared for some required documentation.
Depending on the amount of equity you have on your home, you may be provided a loan based on a percentage of the home's total value.Lenders will see various details about your credit history before offering you a loan, so besure to take advantages of of online comparison services that provide multiple loan offers without obligating you to sign up.
When comparing a second mortgage loan to a HELOC, you have to remember that payments on the second mortgage will be fixed and rates will vary for HELOC.Do a careful calculation on what type of payments you can afford taking into consideration your first mortgage, your car and personal loan payments and your household expenses.Your current financial needs will help you determine what type of loan is right for you.