Until a few years ago most banks and mortgage lenders were very strict about giving a second mortgage and second mortgage refinancing. As a consumer you need to learn what is a 2nd mortgage, and how to apply for one. Getting a second mortgage was frowned on in the past and made some borrowers feel like they were being penalized for inappropriate behavior. Today there are many options regarding second mortgages, understanding what is 2nd mortgage allows you to make better choices regarding your mortgage.
A second mortgage is a loan taken out after having a first mortgage. The amount of money that you can obtain for 2nd home mortgages is determined by the amount of equity in your property. The equity of a property is based on the total outstanding mortgage divided by the current value of your property. For example, a home with a value of $500,000 and a mortgage of $200,000 has 60% equity remaining on the property.
Knowing what is a 2nd mortgage is an important topic because a second mortgage can be used for different purposes. Some reasons for getting a second mortgage are debt consolidation, financing home renovations and other emergency expenses. Normally 2nd mortgages rates are higher than first mortgage rates but if your credit card interest rates are high a second mortgage with lower interest rates becomes a more appropriate option for your needs.
A borrower should be aware that procedures regarding what is 2nd mortgage. Our private mortgage lender guidelines are less strict than the major banks, making it easier to apply for a second mortgage. Another positive is it can take less time and effort to get a second mortgage as opposed to refinancing a loan. Second mortgages can also have a lower rate of interest which in the long run can save you money.
A lot of people asking what is a 2nd mortgage also seek help on choosing which kind of mortgage loan to get. When choosing a second mortgage, there are three types to choose from. There is a traditional second mortgage, a home equity loan, and a home equity line of credit. A home equity loan is a loan where the borrower uses the equity in the home as collateral. Home equity loans are helpful with major expenses such as bills or home repairs. With so many questions regarding “what is 2nd mortgage” we recommend getting a mortgage agent that can assist you.
Consider all your options before trying to answering the question what is 2nd mortgage all by yourself. Our mortgage agents can answer all your questions regarding what is a 2nd mortgage and do most of the paperwork for you. Give us a call today for your free consultation.