Pros and Cons of Second Mortgage Loans
A second mortgage loan is a loan that takes secondary lien position relative to your first mortgage. The amount you can borrow depends upon how much equity you have; however, there are lenders that offer these mortgages up to 125% of your propertys value. Before taking one, here are some pros and cons to weigh:
Pros
1. Avoid Mortgage Insurance
If you are a conforming borrower borrowing more than 80% of your homes worth, most lenders will require you to pay monthly Private Mortgage Insurance (PMI), an insurance policy that covers their risk. To avoid this fee, you can often break your loan into two mortgages, a first mortgage and a second mortgage piggybacked on top of it. This eliminates the required PMI, which can be as much as another mortgage payment.
2. Reasonable Fixed Rates
As an alternative to high interest credit card debt, second mortgages usually offer fixed rates that are at least half of revolving debt rates. Although a few points higher than conforming first mortgage rates, this option frequently saves consumers hundreds of dollars per month.
Cons
1. Your Home May Become Harder To Sell
Utilizing a second mortgage to max out your equity, or worse with the 125% options, may make it harder to sell your home. Although you are not thinking of selling today, you should consider your long-term financial goals before taking this route.
2. Foreclosure Danger
Whenever you increase the liens against your property, you increase your chances of foreclosure. Like any other mortgage, failure to make your payments on second mortgages can result in you losing your home.
As with any financial decision, taking a second mortgage requires careful consideration. Keeping these factors in mind will help you make the decision that best fits your financial needs.
List of Recommended Second Mortgage Companies Online - We maintain a list of recommended mortgage companies online and update the list regularly.
Do You Have Bad Credit? Here Are Our Recommended Poor Credit 2nd Mortgage Lenders - We also maintain a list of lenders who service borrowers with credit problems.
Interest-Only Bad Credit Mortgage Loans - Pros and Cons
Interest-Only Bad Credit Mortgage Loans - Pros and ConsInterest-only mortgage loans allow you to pay only the interest on a m...
Mortgage Loans - What Exactly is "Prepayment Penalty"?
There are lots of home owners who have prepayment penalty on their mortgage, but do not know exactly what it is. More amazin...
Pros and Cons of No-Documentation Mortgage Loans
In todays marketplace, there are many borrowers who do not fit the traditional mold, especially in terms of their employment,...
California Mortgage Refinance Loans
A California mortgage refinance loan is a good solution for those individuals in California who cannot meet their monthly mor...
Mortgage Loan - Your Equity and Your Finances
If you are homeowner considering using the equity in your home for some purpose, there are several things you need to know be...
How to Save With Equity 100% Mortgage Loans
The 100% equity mortgage loans present a new strategy to home-owners by helping them to borrow cash against the full value of...
Fixed Rate Mortgage Loans: Pros and Cons
Mortgage loans that offer fixed interest rates are the most common type of loan for new home buyers. Since the interest rates...
Fixed Rate Mortgage Loans - Understand the Pros and Cons of the Fixed Rate Mortgage
There are many benefits and drawbacks to consider when deciding if a fixed rate mortgage is right for you. It is important to...
100% Mortgage Loan with Bad Credit
If you are a homeowner with poor credit and are looking for 100% mortgage financing, you might be surprised to discover it is...
Mortgage Loan Rates
A dream is realized when you purchase a home. However, when you start out to acquire a home you need to ensure that the mortg...
Mortgage Loans Explained In Plain English
With the many different kinds of mortgage loans out there, choosing the right one for your needs can be a difficult task. The...
Mortgage Loan Interest Rate Basics
Understanding interest rates is an important part of finding the right mortgage for your home. Making informed financial dec...
California Mortgage Loan Company What are Your Mortgage Options?
Many new home loan programs make it possible for anybody to getapproved for a mortgage regardless of credit or income. Becaus...
Interest Only Mortgage Loans
Interest only mortgages can be a great way to secure short-term financing to purchase your dream home. Interest only mortgag...
Mortgage Loan: 40 Year Mortgage Loans
As the cost of real estate has risen significantly over the past years, many lenders have started offering new products to as...
Pros and Cons of Getting a Second Mortgage to Avoid Jumbo Mortgage Loan Rates
The Federal National Mortgage Association (FNMA) and the Federal Home Loan Mortgage Corporation (FHLMC), commonly known as Fa...
Expanding Your Auto Detailing Business - The Pros and Cons to Aircraft Cleaning
As the founder of an aircraft cleaning business, and after franchising it all over the country, I often get asked about the i...
Fixed Mortgage Loan: Squeeze the Best Out of It
Because of minimum risk involved in fixed mortgage loan, it has become most preferred loan for the borrowers. It is one of th...
The Pros and Cons of Adjustable Rate Mortgage Loans
An adjustable rate mortgage can be enticing to any new homeowner. After all of the other expenses that go along with buying a...
1% Mortgage Loans- Pros and Cons of the Option ARM Mortgage for Refinance or Purchase
Negative Amortization Loans have been reintroduced to homeowners as the Option ARM Loan. Is this the case of sneaky mortgage ...