Welcome to Mortgage Guide
Mortgage Closer Article
. For a permanent link to this article, or to bookmark it for further reading, click here.
Second Mortgage
from:Many homeowners consider adopting a second mortgage on their property. This type of loan is secured with the same collateral as the initial home mortgage advance. This second loan is subordinate to the original.
It may seem unlikely that a lender would provide funds for a home that already has a loan against it. However, in real estate a single property can have multiple liens and loans. The first mortgage is registered as a first position trust deed.
The second mortgage is registered as a subordinate lien against the same property. In very rare cases, a singe property can have a third or a forth mortgage. The third and forth loans are quite unusual and most lenders shy away from such agreements.
If the loan goes into default, the initial loan is paid off first. The next loan is paid off later in such an instance. This makes the subordinate loan quite risky for the lender and it also makes getting one of these loans a little more difficult.
The consumer can expect to pay a higher interest rate on an additional loan. This ensures that the lender is compensated for the risk that it takes in the process. The homeowner can pay off the loan by making slightly higher payments than required in some instances.
Home Equity Loans
Some homeowners may be surprised to discover that a second mortgage can take the form of a home equity loan. In essence, the two are pretty much the same, at least from a financial point of view. The major difference seems to be a matter of syntax.
A home equity loan refers to the debt and a mortgage focuses more on the legality of the agreement. Some homeowners feel a little more comfortable taking out a home equity line of credit or loan rather than a second mortgage because they seem less intimidating. However, they are essential the same thing when you take a purely financial perspective.
Term Length
The term length of a second mortgage depends greatly on the lending institution and the borrower. Some agreements are arranged to take twenty years to pay off in full. Others may be paid off in a year or two.
Lender Requirements
Lenders do not want homeowners to default on their loans. In most cases they take great care to assure that applicants are able to pay the debt comfortably and within the specified timeframe. There are some things that lenders look for before granting a second mortgage.
There should be enough equity in the first mortgage and the homeowner should show a capability to pay. The capability to pay is typically measured with a debt-to-income ratio balanced with a healthy credit score. The applicant’s work history will be a factor as well.
Homeowners should look into refinancing their first loan before applying for a second loan. In many instances a simple refinance loan can take care of the homeowners’ needs. It is also much more difficult to get approved for refinancing if you already have a second mortgage.
Mortgage Closer News
CEO: Ally closer to IPO, private equity sale after ResCap bankruptcy - Detroit Free Press
 Financial Times | CEO: Ally closer to IPO, private equity sale after ResCap bankruptcy Detroit Free Press By Nathan Bomey With the bankruptcy filing Monday of its distressed mortgage unit, Detroit-based Ally Financial moved closer to paying back more of the $11.7 billion it still owes US taxpayers. Ally and the federal government blessed the Chapter 11 ... Ally Financial IPO Unlikely This Year, Company Source Says Ally puts mortgage unit into bankruptcy |
Community Housing Innovations (CHI) Will Host Free Fast Track™ Loan ... - PR Web (press release)
 PR Web (press release) | Community Housing Innovations (CHI) Will Host Free Fast Track™ Loan ... PR Web (press release) Community Housing Innovations (CHI), a HUD approved non-profit housing counseling agency, will host a free three day event to help Chase Bank mortgage holders who are having difficulty paying their loan move closer to a resolution through one-on-one ... |
ResCap Bankruptcy Would Move Ally Closer to IPO - Wall Street Journal (blog)
 Go Banking Rates | ResCap Bankruptcy Would Move Ally Closer to IPO Wall Street Journal (blog) WSJ colleagues Dan Fitzpatrick and Mike Spector report, Residential Capital, the mortgage unit, is nearing a bankruptcy filing. A filing for the mortgage subsidiary, called Residential Capital LLC, could come Sunday or Monday and would mark the last ... Ally Financial Subprime Mortgage Unit Files for Bankruptcy |
Mortgage settlement could go in state's budget hole - San Francisco Chronicle
Mortgage settlement could go in state's budget hole San Francisco Chronicle Jerry Brown's plan to use $411 million in revenue coming to the state as part of the national mortgage settlement to help shrink the general fund deficit. In his revised 2012-13 budget released last week, Brown proposed using most of the money for ... |
First-time LI home buyers closer to 'American Dream' - Long Island Report
 Long Island Report | First-time LI home buyers closer to 'American Dream' Long Island Report The LIHP, established in 1987, is a non-profit housing organization that aids with the difficulty of home ownership by providing development, assistance and mortgage counseling to those seeking to purchase homes on Long Island. |