 Sam
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 Posted: Sat Apr 03, 2004 2:50 am Post subject: Junior Mortgage - Home Loan subordinate to Primary mortgage |
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Junior mortgage is a home loan which is subordinate to the claims of a previous mortgage. It helps to obtain additional funds required for down payments or closing costs.
Features:
- These are short term loans compared to the primary mortgage.
- Junior mortgages are available at higher interest rates
- The monthly payments are large and the overall loan cost is higher in comparison to primary mortgage.
- These home loans are less costly than unsecured loans.
Requirements:
In order to avail a junior mortgage, you should maintain a good credit profile and meet the requirements of the lender. You must be able to prove that you can repay the junior mortgage even after paying down the primary mortgage. Usually lenders review your credit history, credit score, employment history, financial situation, debts and other factors.
With a junior mortgage, you can access home equity and convert it into cash. But lenders often discourage offering this kind of loan as they have a high risk of losing money if the borrower defaults. This is because the borrower has to first pay off the primary mortgage and only then, he can start off with the payments on the junior mortgage. Even if the property is sold off to clear down the debt, the lender offering junior mortgage does not receive any part of the sale proceeds until and unless you pay off the first lender.
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