Why should I get a second mortgage? It's a good way to pay off high interest debt.Written by Syd Johnson
Second mortgages are basically any type of home loan that you take out while still making payment on primary mortgage. This is not an arrangement to be entered lightly because you will end up paying a lot of fees and can rack up a huge debt that negates some of progress you have made in paying off your original mortgage.Keep loan below Fannie Mae guidelines One of most common reasons to get a second mortgage is to keep your home loan amount below Fannie Mae guidelines. Fannie Mae purchase home loans from lenders all over country, but only if loans are in accordance with some very strict rules. If a lender wants to make sure that your loan does not go over Fannie Mae limits, they can give you a primary loan for one amount and add a second mortgage for remaining balance. It’s creative, and there are many alternatives to this arrangement, but it works. Home equity loans Another way to get a second mortgage is when you sign up for a home equity loan. The loan is basically secured by amount of equity you have earned in your home. However, if you do math, you are reducing your equity.
| | Subprime mortgages: A growing option for customers with bad crediWritten by Syd Johnson
Subprime mortgage are home mortgage loans to consumer with poor credit histories. This category includes customers with late payments, foreclosures, bankruptcies and more on their credit applications. It also includes some first time buyers and people without a long credit file.If you are new to country of for some other reason was shut out of financing for a while, you might not have enough information on your credit file about your spending habits, credit cards and more to warrant a regular mortgage application. Subprime mortgages are designed to accommodate high risk clients. In real estate financing industry high risk always comes with high interest rates. It is not unusual for a subprime loan to carry rates that are three points or more above national average. In addition, loan amounts tend to be a bit smaller.
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