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10 Big second mortgage mistakes to stay away from

Getting and managing a [url=http://www.mortgagefit.com/second-mortgage.html]second mortgage[/url] may not sound tough if you've already taken out a loan against your home. However, there are loopholes that you should avoid. So, prior to getting a second loan, take a look at the [b:f87e1466b9]10 big mistakes[/b:f87e1466b9] that can make things worse for you.



1. Not being aware of Home equity loans and HELOCs

Home equity loans and HELOCs are both second mortgages taken out against your home equity. Home Equity loans can be either fixed or adjustable, while HELOCs are only available as adjustable rate loans. In addition, Home equity loans are one-time loans, while HELOCs are revolving lines of credit.

Moreover, the purposes of these loans are different. For example, a [url=http://www.mortgagefit.com/home-equity.html]home equity loan[/url] is designed to help you consolidate debts or make home improvements, but when it comes to fulfilling your periodic needs, HELOC is better. All you need is a basic understanding of both the loans to make them work for you.

2. Taking out a large credit line

Think twice before you take out a large credit line. How much your line of credit is for will be taken into account when you apply for other loan and can possibly get rejected too.

Most often your credit line payments are determined on the basis of your total credit liability even though you have not taken out any money from your line of credit. A large credit line implies large payments that may affect your ability to repay the second mortgage as well as other loans.

3. Not shopping enough for the best loan

You may decide to take out the loan from the bank where you have a checking account. But if you wish to get the best loan for your needs, look one that can give you some benefits and help you save due to lower interest rates.

Therefore you should shop around and get quotes from other lenders/brokers to see what else you can get before comparing and choosing the best one.

4. Not asking for a Good Faith Estimate

It's your lender's responsibility to provide you with a Good Faith estimate (GFE) after you apply. A GFE provides you with a breakdown of all the fees involved so you can be assured that you will not be paying any hidden fees or costs. So, even if your lender forgets, just remind them that you are yet to receive a GFE.

5. Thinking a second mortgage costs you less

You may have to pay less on a second mortgage than if you are managing a credit card. To find out which is better, you need to consider the interest rates on credit cards and compare it with the rate on a second mortgage after taking into account the tax deduction. For example, if you have taken a HELOC. Its effective rate is:

Effective rate = rate* (1 - tax bracket)

If your tax bracket is 30% and the actual rate on the credit line is 15%, then,
Effective rate is = 15% * (1 - 0.3) = 15% * 0.7 = 10.5%

Now, if your credit card interest rate is higher than 10.5%, then the second mortgage will be cheaper to manage.

6. Going for second mortgage when you plan to refinance

Lenders may not allow a first mortgage [url=http://www.mortgagefit.com/refinance.html]refinance[/url] when you already have a second loan on the same property. They may look at the combined loan amount even if you refinance only the first loan.

Lenders may either ask you to pay off both the loans completely or pay down the second loan when you refinance. However, they may allow you to keep the second loan if you can get a subordination agreement from the second mortgage lender.

This agreement ensures that the second loan has a lower priority with respect to the new refinance loan. Thus, you need to consult the lender offering the refinance loan as to whether they will allow you to keep the second mortgage. You can also compare the rates on the refinance and the second loan to find out if it makes sense to keep the second mortgage and refinance the first or refinance both into a single loan.

7. Being unaware of second mortgage tax deduction

Your home equity loan/HELOC may not be fully tax-deductible and you can't always trust the lender to give you the correct information. If you want to take advantage of any tax deductions, you should consult a tax advisor or a CPA.

8. Use Heloc to pay off credit card debts

If you have taken out a HELOC to pay off credit card debts, make sure that you don't completely exhaust the available credit limit. You may find it hard to make the payments on time.

9. Being unaware of a prepayment penalty

There may be a prepayment penalty clause in the second mortgage agreement that could cost you a lot of money if you try to sell or refinance your home and pay off your mortgage early.

10. Not knowing about life caps

Usually home equity lines of credit have life caps where the interest rate can go up much higher than you expected. So, plan your budget and keep a cash reserve if you need it.
No matter why you need money, getting a second mortgage can be a good way to get it. But in order to avoid a second mortgage trap, you should know what you're getting into before you take out a home equity loan or a HELOC.
Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Yes, we did it, the credit card people herrassed us so badly, we took and put up our home for a secound morgage. Now we can't afford it and we are paying so much amonth the payments are more that the house is worth. What to do??

Like | Dislike | Share | Posted: Wed, 01/27/2010 - 11:10 | Post subject:

adonis's picture
adonis | Joined: October 22, 2005 05:04 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Welcome anonymous,

I've given my suggestions in regards to your query at:
http://www.mortgagefit.com/postdeal/about38598.html#164690

Take a look at it. Hope it helps you.

Like | Dislike | Share | Posted: Wed, 05/12/2010 - 23:29

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

I have home, only owe $37,000. interest rate is 8.75. Want to refinance at lower rate and borrow to purchase 2nd home at same rate combined with 1st mortgage.

Like | Dislike | Share | Posted: Sun, 02/28/2010 - 16:40 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

I'm not sure I explained myself correctly. In the process of applying for a refinance loan to lower my monthly payments, I discovered I have more equity than I thought. Realizing this I wonder if I couild use this money to pay off credit cards, however I don't know how to go about this. Should I take this money as an equity line of credit or take out a second mortgage or [url=http://www.mortgagefit.com/home-equity.html]home equity loan[/url]? I would like to make a decision soon before the refinance is complete.

Like | Dislike | Share | Posted: Wed, 11/04/2009 - 08:41 | Post subject:

jameshogg's picture
jameshogg | Joined: December 20, 2005 02:58 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Slapres,

Your query has been replied to in the given page: http://www.mortgagefit.com/Mortgage-Basics/Home-Equity-Loan-95-LTV.html . Take a look at it. I hope it will help you.

Thanks

Like | Dislike | Share | Posted: Thu, 01/16/2014 - 20:13

Slapres's picture
Slapres | Joined: January 16, 2014 05:26 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

My husband and I have excellent credit scores, but when I ask about needing a 2nd that would go to a 95% LTV, we can't seem to find any lenders. Any suggestions who might do them in Colorado?

Like | Dislike | Share | Posted: Thu, 01/16/2014 - 17:59 | Post subject:

Slapres's picture
Slapres | Joined: January 16, 2014 05:26 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

My husband and I have excellent credit scores, but when I ask about needing a 2nd that would go to a 95% LTV, we can't seem to find any lenders. Any suggestions who might do them in Colorado?

Like | Dislike | Share | Posted: Thu, 01/16/2014 - 17:57 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

I have a low rate currently on the equity line, however, these payments
are killing me. I would love to eliminate the 70 but don't know how.If i
sold my home for 200 oweing 45000 to equity, do i have to pay that?

Like | Dislike | Share | Posted: Fri, 09/03/2010 - 10:44 | Post subject:

Niicss's picture
Niicss | Joined: October 3, 2005 11:54 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

To Anita,

If you are unable to pay the second mortgage dues, the lender will have the right to foreclose the property or charge off your account to a collection agency. Both will affect your credit report. As you are unable to pay the mortgage dues, you should contact your second mortgage lender and apply for a loan modification.

To djmoz,

If you want to buy a second home, you will have to use it as a collateral and get a mortgage on it. Moreover, lenders are generally not ready to give you a mortgage to buy a new property if you already have a mortgage.

As far as your first mortgage is concerned, you will be able to refinance the loan depending upon your financial situation and credit report. You should only refinance if you are planning to stay in the property for a long period of time.

Like | Dislike | Share | Posted: Mon, 03/01/2010 - 01:28

jameshogg's picture
jameshogg | Joined: December 20, 2005 02:58 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Felicia,

Rather than taking out a [url=http://www.mortgagefit.com/second-mortgage.html]second mortgage[/url], you can [url=http://www.mortgagefit.com/refinance.html]refinance[/url] the loan and take a cash out of $10,000 to pay off the credit card debts. Thus, you would be liable for a single monthly payment on your mortgage rather than two separate payments that you'll have to pay if you takeout a second mortgage on your property.

Thanks

Like | Dislike | Share | Posted: Wed, 07/21/2010 - 00:50

smith.sussane's picture
smith.sussane | Joined: September 18, 2008 09:57 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi roseann!

Welcome to forums!

As you've equity in your property, you can refinance both the loans into one. The cash proceeds that you receive while refinancing the loan, will help you in paying off the HELOC. Thus, you will be liable for paying only one mortgage.

Feel free to ask if you've further queries.

Sussane

Like | Dislike | Share | Posted: Fri, 09/03/2010 - 22:54

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

I have property in another state. If I want to buy a house in NJ can I combine the mortgage or take another one out in this state

Like | Dislike | Share | Posted: Sat, 10/13/2012 - 12:22 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Owned house 420,000 with a mortgage 242,000. Want to buy an investment apartment but not enough for 20% down. Should I take a second mortgage for the whole 20% on my home or just 10% what I need or do not buy? :roll:

Like | Dislike | Share | Posted: Tue, 07/13/2010 - 16:50 | Post subject:

sara's picture
sara | Joined: July 5, 2006 03:16 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi amjkkl,

If you have equity in your property, then you'll be able to get a 20% loan on your existing property. You may even cash out the amount that you want to use as a down payment. If you have the required equity, then I don't think it would be a problem for you.

Take care.

Like | Dislike | Share | Posted: Wed, 07/14/2010 - 01:32

blue's picture
blue | Joined: October 21, 2005 09:17 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

How is your credit? Both of them can be put under 30 year fixed.

Like | Dislike | Share | Posted: Thu, 05/11/2006 - 17:13

Samantha's picture
Samantha | Joined: September 16, 2005 11:59 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Laura,

Welcome to MortgageFit Forums.

I feel bad about the way the representative had misguided you. Now credit lines allow a lower rate in the initial stage but your payments go up as the Federal Reserve raises short-term rates.

This makes credit lines less attractive deals today with frequent rise in rates. Since it is becoming tough for you to meet the hike, it's wise to refinance it into a fixed rate home equity loan.

Consolidating the loans is also another option. You can refer a reputable mortgage broker in your area with all your docs.

God bless you.

For MortgageFit,
Samantha

Like | Dislike | Share | Posted: Thu, 05/11/2006 - 13:31

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Did you question your company about the commitment of the representative? :shock: I think it's better to refinance with a different company. A good mortgage broker can come to your help.

Like | Dislike | Share | Posted: Thu, 05/11/2006 - 13:14

Niicss's picture
Niicss | Joined: October 3, 2005 11:54 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

You can take out a loan on your unimproved lot. If the lot has a first mortgage, then you'll have to check out whether or not there is equity in the property. You'll get a second loan on the lot if there is equity in the property. You can speak to the local lenders in your area and check out the type of rates and terms you'll qualify for. This will give you an idea about the market rates.

Like | Dislike | Share | Posted: Mon, 10/04/2010 - 01:38

jameshogg's picture
jameshogg | Joined: December 20, 2005 02:58 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Some more information is required about your income, credit, loan amounts.

An HELOC can be converted to a fixed rate. You should ask your lender about that.

Like | Dislike | Share | Posted: Thu, 05/11/2006 - 13:10

blue's picture
blue | Joined: October 21, 2005 09:17 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Laura,

These things happen sometimes and so it's always better to have all the offers in paper than believing the words of a representative of the company. Anyways people do learn from mistakes.

I think it's better to consolidate your mortgage under one head and try to pay it off rather than going for a new mortgage.

Blu

Like | Dislike | Share | Posted: Thu, 05/11/2006 - 12:30

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

We feel like we have been dupped by a fast talking mortgage rep.
Ten months ago we applied for a home equity loan, and were sold a home equity line of credit at an intro interest rate of 5.25% it is now up to 10.25%.
The rep. told us it would not go above 9%. Well after pulling out all the paper work and reading the fine print the cap is 18%!
Can a home equity loan be refinanced to a fixed rate?
Our home value is appx. $195,000. Our first mortage is $107,000 at 5.7%
our equity balance is $58,500. Which was used for debt. consolidation and home improvement costs.
We are at a quandry on what to do, consolidate into one mortage or refinance the home equity loan? We have owned this home 3 yrs.

Like | Dislike | Share | Posted: Thu, 05/11/2006 - 12:13 | Post subject:

Jessica's picture
Jessica | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Marilyn,

Generally a lender makes a mortgage loan on the basis of the sale price or the appraised value, whichever is less. You can get an equity out of your property either by selling it or financing it. But the interest rate on a second mortgage or a home equity loan often being higher than a first mortgage, it does not make sense paying the first loan with the second.

Before you proceed towards getting a loan, consult the loan officer and check your borrowing ability. Also talk to a real estate broker regarding the bidding and deposit requirements for a local foreclosure sale.

Regards,
Jessica.

Like | Dislike | Share | Posted: Tue, 10/25/2005 - 03:41 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi! i bought a house for $1,20,000 and its appraised value is $1,70,000. So can i take a home equity loan on the equity, that is, $60,000 to pay down the home mortgage?will the lender allow me to take this kind of loan if I say that I shall repay the first mortgage with the equity loan?

Like | Dislike | Share | Posted: Tue, 10/25/2005 - 00:12

jameshogg's picture
jameshogg | Joined: December 20, 2005 02:58 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Guest,

As you want to pay off your credit card debts, I think a home equity loan would be a better option for you. However, the equity in the property will not help you in getting the loan, you should also have good credit score and a stable income for the same.

Thanks.

Like | Dislike | Share | Posted: Wed, 11/04/2009 - 19:55

smith.sussane's picture
smith.sussane | Joined: September 18, 2008 09:57 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Guest!

Welcome to forums!

In my opinion, [url=http://www.mortgagefit.com/refinance.html]refinance[/url] would be a better option compared to second mortgage. If you take a second mortgage, you would become liable for two mortgages. A refinance will help you in paying off the earlier loan and you would get extra money due to the equity and pay off your unsecured debts.

Feel free to ask if you've further queries.

Sussane

Like | Dislike | Share | Posted: Tue, 11/03/2009 - 22:59

Niicss's picture
Niicss | Joined: October 3, 2005 11:54 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

You'll be able to get a home equity loan if your property has any kind of equity in it. Does your rental/investment property has any kind of equity?

Like | Dislike | Share | Posted: Tue, 12/01/2009 - 00:15

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

why can't i take out a home equity loan on a house i rent out

Like | Dislike | Share | Posted: Fri, 11/27/2009 - 18:49 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi, I bought ahouse for $102,000, it appraises for $150,000. I was thinking of taking a 2nd mortgage of of $10,000 to pay off credit card debt. I was thinking it may be easier to pay one thing instead of several cards with high interests rates. Would this be the best way to approach this by taking a 2nd mortgage out?

Like | Dislike | Share | Posted: Mon, 07/19/2010 - 10:06 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

My mortgage is paid off and I own an unimproved lot. Is it possible to acquire a 2nd mortgage on the lot rather than on my house? and, if so,
how do the possible interest rates compare?

Like | Dislike | Share | Posted: Fri, 10/01/2010 - 23:33 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

I am in the process of refinancing and have discovered I have equity, I have high interest rate credit cards. Would you recommend a second mortgage or heloc.

Like | Dislike | Share | Posted: Tue, 11/03/2009 - 13:37 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

I am looking into using the equity I have built up in my home to build a garage. The house appraised for $77,000 in Jan 2009. I owe $49,000 on the home. The garage will hopefully cost under $10,000 due to me doing most of the work. What is your advice on this situation. :wink:

Like | Dislike | Share | Posted: Wed, 05/12/2010 - 10:30 | Post subject:

adonis's picture
adonis | Joined: October 22, 2005 05:04 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Louise,

You cannot combine mortgages which have been taken out on two separate properties. You will have to take out a separate loan on that new property.

Like | Dislike | Share | Posted: Mon, 10/15/2012 - 00:26

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

What other banks loan against a lot others than BB&T?

Like | Dislike | Share | Posted: Wed, 06/12/2013 - 20:38 | Post subject:

smith.sussane's picture
smith.sussane | Joined: September 18, 2008 09:57 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Steelers!

Welcome to the forums!

You can look out for lot loans. You can contact other local lenders and apply for a mortgage. If you meet all the required criteria of the lender, then you will be able to get the loan.

Feel free to ask if you've further queries.

Sussane

Like | Dislike | Share | Posted: Wed, 06/12/2013 - 22:06 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

lender was talking about some optional credit insurance with the home equity loan, what is it?

Like | Dislike | Share | Posted: Sat, 05/12/2007 - 19:50 | Post subject:

colin's picture
colin | Joined: June 30, 2006 02:50 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Wolfe,

Welcome to Mortgagefit forum.

Some loan packages include optional credit insurance could be like disability credit life or unemployment insurance. Based on type of policy this credit insurance can cover part or most of your payments in case you are not able to make them.

Let me tell you that you are not required to buy any such optional credit insurance and that is why these are called as optional. Only buy insurance which you need.

Colin

Like | Dislike | Share | Posted: Sat, 05/12/2007 - 20:00 | Post subject:

Niicss's picture
Niicss | Joined: October 3, 2005 11:54 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Wolfe, credit insurance can be bad deal if premium on such insurance is collected up-front at the time of closing & is financed as part of the loan.

However, if you do require optional credit insurance then inquire about possibility of being allowed to pay for it on a monthly basis after the approval & closing of the loan. It will be helpful as with monthly insurance premiums you will not have to pay interest. And afterwards if you think that you do not require the insurance or if the premiums are too high then you can select to cancel the insurance.

Niicss

Like | Dislike | Share | Posted: Sat, 05/12/2007 - 20:11 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

would it be considered as a mistake if I take out a second mortgage instead of refinancing my first, how to decide if I am right in taking a second one & not refinancing my first?

Like | Dislike | Share | Posted: Mon, 05/28/2007 - 18:20 | Post subject:

blue's picture
blue | Joined: October 21, 2005 09:17 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Dunham,

Welcome to Mortgagefit discussion board.

You need to first compare rate on your present mortgage with current interest rate for same type of mortgage. Plus also check for how many years you have this first mortgage now.

Let us assume that you have been making payments on your current mortgage for only a few years now & present interest rates are quite close to what you have on your existing mortgage. In such situation you can consider refinancing your present mortgage.

But if rate on your present mortgage is substantially lower than current market rates & you are making payments towards your present mortgage for quite a few years now (say more than 6-7 years) then taking out a second mortgage will be more advisable then refinancing your present loan.

Do let me know if you have any other questions.

Thanks
Blue

Like | Dislike | Share | Posted: Mon, 05/28/2007 - 18:30 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

I'm considering a second mortgage in order to buy another home. I would then rent my current place to a tenant and move into the new (less expensive) home in order to have a lower monthly mortgage payment. I owe $80K and my condo is worth about $240K. My current int rate is 5.75% on the first loan. If I took a second mortgage on my current home, can you estimate the monthly payment for me? I hope this makes sense...I'm exhausted. Thanks for your help!

Like | Dislike | Share | Posted: Mon, 02/25/2008 - 22:50 | Post subject:

Jessica's picture
Jessica | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Rob,

Welcome to our community forums.

In order to determine the monthly payments on your second mortgage, I need to know what loan amount you are getting from the lender, the rate of interest and whether it's a home equity loan or Heloc etc. First of all, are you buying a house just for the sake of it or is it all about getting a less expensive home?

Please don't take up a second mortgage just because you want to lower payments. Payments can be lowered even if you can refinance and that's a better option. But I don't know how much lower a rate you can get considering the fact that you already have an interest rate of 5.75%.

I think it's better if you talk to a few lenders and find out what rate they can offer you on the refinance loan. A second mortgage is again another loan on the home and it is risky because you will be managing 2 loans and if in case you can't pay, you're in trouble with 2 loans. Still, if you think your current financial situation is good enough to help you afford the 2 loans, then you may very well go for it.

However, choose a good tenant who can look after the property well without damaging it. And, make the payments on your own from the rental payments; don't leave it for the realtor to collect the rent and pay the mortgage. You may land up in trouble later. I find so many people sharing their experiences on how they've suffered at the hands of tenant and realtors.

Regards,

Jessica

Like | Dislike | Share | Posted: Tue, 02/26/2008 - 02:36 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Jessica,
Thanks for your reponse. My purchase of a new home would be for several different reasons- investment purposes, to be closer to a different job, as well as a lower mortgage payment. My thoughts on achieving the lower mortgage payment are this: buy a home for say $150, base the [url=http://www.mortgagefit.com/home-equity.html]home equity loan[/url] amount on the number necessary to successfully get my mortgage payment on the new place down to less than my current payment. I'm hoping to bring in enough on rent to cover my current mortgage and part of the 2nd mortgage. I guess I'm just trying to figure if that is achievable based on rough figures (estimates) right now.
Another question is- should I take a larger home equity loan so that I have some reserves in the bank to cover a missed tennants mortgage payment? Lastly-does it make sense to take enough to cover the expense of a new car as well? Thanks for any advice you can give. I know there's a lot of hypothetical info here. I'm just trying to think things through and figure if it's even possible to pull this off based on the high amount of equity that I have. I hope that by not selling my current place that in a couple of years the market will have rebounded and I'll be glad I kept it and rented it vs. selling.

-Thanks so much,

Rob

Like | Dislike | Share | Posted: Tue, 02/26/2008 - 06:38 | Post subject:

Samantha's picture
Samantha | Joined: September 16, 2005 11:59 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Rob,

Welcome back.

I don't know how a [url=http://www.mortgagefit.com/second-mortgage.html]second mortgage[/url] can give you lower payment because usually these loans being subordinate to that of the first, make you pay more in interest. And, if you are taking a larger home equity loan, what loan amount are you expecting? because if you take too large an amount, you may later have problems paying it and may even lose the home.

What I'll suggest is, if you are that keen on buying a second home, go for a loan on the new home itself.

Please let me know if there's anything more you'd like to discuss.

Hope this helps...

God bless you.

Samantha

Like | Dislike | Share | Posted: Thu, 02/28/2008 - 02:01 | Post subject:

charles.armbruster's picture
charles.armbruster | Joined: October 12, 2006 04:26 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

OK -- you can [url=http://www.mortgagefit.com/refinance.html]refinance[/url] your current home from $80k to $190k, taking $100k cashout to give you down-payment funds for your $150k new home purchase and some extra for mortgage payment cushion and car purchase....you need to decide if your want to pay for a car inside your mortgage, since when you replace it...you'll still be paying for it inside that mortgage -- this is really a judgement call, since you may be selling the rental home for a good profit in the future.

Your new $190k loan (<80%LTV) will price out at about $1300/month. Your new $100k purchase loan will price out at about $750/month. To qualify with FULL DOC income/employment, you'll need to afford $2050 plus your normal expenses less 75% rental income each month (assuming you own no other properties)....otherwise, take less cash-out.

If you are intent on buying another property, you should make application to determine your options -- a good loan officer and realtor will guide you to a good deal with the right financing. GOOD LUCK!!

Like | Dislike | Share | Posted: Thu, 02/28/2008 - 09:59 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

I have been divorced for a year or more and am worried about my ex not meeting payments on the house. Even though she got to keep the house and assume payments when we were divorced my name is still on the mortgage as co-borrower. She doesn't currently have a full time job, but makes payments from alimony and child support. Is there any way I can get my name off the mortgage?

Like | Dislike | Share | Posted: Mon, 04/14/2008 - 11:07 | Post subject:

larry2's picture
larry2 | Joined: June 27, 2007 02:50 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi albe,

Welcome to the forum.

To remove you from the mortgage your ex will have to refinance the mortgage on her name. So can she refinance the mortgage? Are you still on the deed?

Please inform these queries so that I can help you better.

To know more about refinance check out http://www.mortgagefit.com/refinance/faqs.html

Best of luck,
Larry

Like | Dislike | Share | Posted: Tue, 04/15/2008 - 01:44 | Post subject:

gmakerley's picture
gmakerley | Joined: November 9, 2007 07:36 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

albe, it appears from your post that your former wife would be unable to refinance at this time, based on her lack of employment. of course, if the alimony and child support payments are sufficient for her to qualify, that is another story.

frankly, it's impossible for us to make any determination of her ability to refinance based on sketchy information. in other words, she may or may not be qualified to refinance.

the topic of [url=http://www.mortgagefit.com/know-how/novation-mtg.html]novation[/url] has been brought up in many of our forums here. this is a process in which the lender (holder of the mortgage), your former wife and you all agree that you would be removed from responsibility for the payments. clearly, this is a topic you and she ought to discuss, and if you can agree on it, then take your case to the lender.

typically, if your divorce decree stipulates that you are to be excused from making payments on the mortgage, the lender would honor that. to remove your name from a document you signed is, of course, impossible. the best methods to relieve yourself of the obligation are for her to refinance or for the two of you to seek and receive approval for novation.

Like | Dislike | Share | Posted: Wed, 04/16/2008 - 07:53 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

My husband and I want to take out a second mortgage. If we owe $129,000 and our house is appraised at $170,000, does that mean we can take out up to $40,000? We want to consolidate debt and also a car loan. Is this correct and the best thing to do?

Like | Dislike | Share | Posted: Sat, 08/02/2008 - 08:54 | Post subject:

Caron's picture
Caron | Joined: July 19, 2005 08:37 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi StacyB,

Welcome to our forums.

The equity in your home is calculated as = Current appraised value – amount you owe

That is, equity = $170,000 - $129,000 = $41,000

So, you can borrow maximum up to $41000. But no lender will be willing to lend you 100% of the equity. Mostly lenders prefer to keep the combined loan to value ratio equal to or less than 80% of the current appraised value, which comes to $32,800 in your case. But if you have great credit and good income, you may get somewhere around 85% also.

Are you looking for home equity loan? If yes, take a look at the home equity loan page and find out what it's all about?

Good luck

Like | Dislike | Share | Posted: Mon, 08/04/2008 - 03:43 | Post subject:

gmakerley's picture
gmakerley | Joined: November 9, 2007 07:36 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

stacy, check around with credit unions and local community-type banks in your area. you may find that they'd be willing to go up to 100% of the property value; and at decent rates, also.

Like | Dislike | Share | Posted: Mon, 08/04/2008 - 08:56 | Post subject:

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