Second Mortgage Loans
Second mortgage loans are one type of home equity loans. It could help you pay for major home improvement, settle debt, business investment or simply pay-off the existing loan. To ensure you can fund for 2nd mortgage, you shall make sure you have gained sufficient equity from your home.
One of the reason borrower preferable second mortgage is to replace the adjustable loan option to fixed rate option. Due to interest rate rapidly increase nowadays, borrower will feel that the monthly payment is more than they can afford. Thus, this conversion might be a good way for them.
Below are some tips provided to keep the costs down and prevent unpleasant matters at closing when taking second mortgage :-
1) 1st move is to check your credit report from credit bureau or some online websites. Should you found any errors at the report, you should inform the credit bureau to correct it immediately. This is to ensure your credit report remaining at the good category and accuracy of credit.
2) Check the market rate right now, whether it is going up or down. If the interest rate is more than your existing rate, it is not worth to take second mortgage.
3) Contact your current lender / bank, request for rate reduction. At the same time get several lenders to quote for your situation. To seek the best deal from the comparison.
4) The limit of second mortgage is ranged from 80% - 85%. Beware of those lending 125% of your home value. It might be a good boost for you to solve your problem. The consequences are you will need to paying much for the loan and interest, if you default the payments, you will probably loose your home.
However, taking this loan might be a smart move or unwise step. If you using this loan to pay-off high interest bills, debt, education, business and etc. It's a smart move, otherwise using the fund for vacation, buying assets is the unwise action.
For more information about the home mortgage loan, please check out
Home Loan Guide instead of Second Mortgage Loans
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