 |
Second Mortgage FAQ
 What is a second mortgage loan?
A 2nd mortgage is a lien in addition to the existing mortgage that already exists on title for the subject property. For most second mortgage transactions, lenders will consider the present market value of a home as collateral for home equity loans with an appraisal. There are two types of second mortgages: 1. installment (fixed rate) 2. revolving (variable line of credit)
How much of a loan amount can qualify for with a 2nd mortgage?
To get an idea how much you can borrow you need to determine how much equity you have and then you can get an idea of loan amount possibilities. To calculate the equity in your home, simply subtract the amount your mortgage balance from your appraised value. When you apply for a 2nd mortgage you need to calculate your combined loan to value (CLTV). You calculate this by taking the existing 1st mortgage balance plus the proposed 2nd mortgage amount and then divide that total by your appraised value. For example, if a home is appraised at $200,000 with a 1st mortgage balance of $145,000 and a 2nd mortgage balance of $45,000 then your combined loan to value would be 95%.
Can I borrow up to 125% of my home's value?
At this time every state allows 125% second mortgages, with exceptions of Texas and West Virginia. Kansas is the only state that requires full URAR appraisals for 125% 2nd mortgages even if the lender permits the use of automated value appraisals.
How are second mortgage interest rates determined?
Credit scores, combined loan to value and current market conditions determine the interest rates for second mortgage loans. For high LTV loan, the credit scores will be the driving factor. 125% lending further affect the rate offered.
Do I have to occupy the residence I am using as collateral?
You are required to disclose your occupation status when ever you apply for a new loan. You are not required to occupy a home for second mortgages, but the interest rates and loan-to-value restrictions will change for loan against homes that you are not living in. For most 100 and 125% second mortgage loans, occupying the property is a requirement.
How does cash-out refinancing affect my first mortgage?
Cash-out refinancing with 2nd mortgages does not affect your 1st mortgage interest rate. However if you decide to refinance your current first mortgage without including your second mortgage, you will need to request a subordination agreement from the lender.
What is the rescission period?
There is a three day right of rescission for all second mortgage loans unless it is in a purchase transaction.
Premium Second Mortgage Loans |
| Refinance Second Mortgage - Rate and Term loans for refinancing credit lines and existing 2nd mortgages. |
|
| Sub-Prime Second Mortgages -It is important to reestablish your credit after a bankruptcy and nothing helps your credit score better than mortgage payments made on time. |
| 125% Second Mortgage - Take out another lien against your home that allows you to go beyond the value of your home. No equity is required but you need good credit to qualify. |
| Home Equity Line of Credit - Set up a cash line today and access funds on your timeline. |
|
| Interest Only Fixed Rate Loans -These 2nd mortgages offer the best of both worlds. You have the benefits of low payments with interest only and the security of knowing that your interest rate is fixed. |
| Second Mortgage Guide offers comprehensive overview of various loan programs |
|
|
|
| Resource Tools |
Loan Comparison Calculator
This calculator will help you to compare the total mortgage interest charges of 4 types of loans.
Find the best loan in your state
|
| Free Finance Guides & Helpful Consumer Reports |
Take advantage of our free guides and disclosures that help 1st time homebuyers.
Call 1-800-242-6986
to speak with a loan officer live
|
|
|
