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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($)

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?

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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.

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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.

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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

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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.

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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.

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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

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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.

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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?

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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

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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

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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?

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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

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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!

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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

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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

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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

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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!!

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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?

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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

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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.

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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?

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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

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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.

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

how long do you have to be in your house before taking out a second
mortgage

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

netta, you will find that second mortgages are almost extinct with major lending companies.

you'll also find many community-based institutions will still go out on a limb and make a second mortgage, and many of these will have no restriction on length of time of ownership.

your best bet is to stay local and to shop around with credit unions or small, community banks.

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lisa.scherzer's picture
lisa.scherzer | Joined: January 4, 2008 08:48 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Netta,

There is no time period although some lenders do require 12 months in the home to use the appraised value over the purchase price.

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

I agree with the negatives on secondary loans/etc.

Except that, if you have known possibility of being able to pay off a chunk of the property ... like in my case, 1/3 of my moms estate, you could get the main mortgage like I did at 5%, and get the 2nd/3rd in small chunks.

I had a $75k, $20k, $10k.

I paid off teh $10k rather quickly on my own. The others continued for a bit. The $20k was paid with my share of moms estate.

The remaining part of my share was not going to be used for mortgage etc but for other... Refinance in this case was not worth it because the rate & payments would have not been better in this case.

If its not worht having the extra mortgages per a quick payoff, dont do it.
2nd mortgags can be expensive.

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

2nd mortgages are now treated more like 'equity line' or equity loans.

Still 2nd mortgage in some ways but as expensive.

MY lline was good till It got close to max..
Once it was paid off, I found it was better to be without lineofcredit.

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

How do I get a remodeling loan for my home that i only been in for less than a year want to add a 2 car garage.

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

I don't think any lender would agree to give you a remodelling loan for a home that you have purchased for only a year. I think you should wait for a year and then apply for a remodelling loan.

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

well, guest, i don't agree with your stance about the length of ownership, but i will have to say that it's a very difficult thing to do to obtain a loan that will allow for construction of anything to an existing structure.

what you may want to do, anonymous, is to check with your local community bank and/or credit union(s), as this is the type of lending that they'll probably be best at. a lot, of course, depends on how much equity you have in the home; but national lenders have, for the most part, departed from this type of lending.

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

hi, I get a commercial line of credit from the bank for 36.5k now the bank call for it , I own a house with about 35k equity should I [url=http://www.mortgagefit.com/refinance.html]refinance[/url] are a [url=http://www.mortgagefit.com/second-mortgage.html]second mortgage[/url]

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

Hi Hubert,

I think a refinance is a better option than a second mortgage. If you take a second mortgage, you will be liable to pay two mortgages. But if you refinance the mortgage at a lower rate, you will have to pay for a single mortgage and the payments can also be low.

Thanks

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

if i purchased my home for 120,000 and my balance on my
first mortgage is 97,000 can i get a 2nd mortgage. I'm not
sure how all of that works. I'm needing to borrow a 100,000
is that possible. i have excellent credit

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

Hi jericafox,

Yes, you can try getting a second mortgage. As your credit is excellent, I don't think you will face much problem in getting a mortgage. You can contact few lenders and get to know what kind of rates and terms you will be receiving from them. This will give you a fair idea whether you will be able to afford the loan or not.

You can also speak to the lenders of this community and get a no obligation free consultation from them. This will help you in knowing the rates and terms that you can expect to get.

Thanks

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

jericafox, you didn't state when you purchased your home. if it was a recent purchase, then your equity position isn't going to be strong enough for you to obtain a loan for $100,000. credit is obviously most important in the borrowing process, but mortgage lenders are restricted by property values, regardless of credit standing.

what you need to determine is the value of your home now. that will provide you with the information you need to see if a loan would be available to you as you described.

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

We recently refinanced our home. The value is appraised at 960K and our mortgage is 417K - with a 30K cash out. We are in desperate need of cash. Would you advice taking out a 2nd mortgage, and is that even an option? We do have good credit but with the markets we can't sell stocks and we need to consolidate some debt to make it through this recession.

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

based on the value you describe, you'd be able to obtain a second mortgage, if all else is equal (income, debt, etc.). i assume that you're trying to consolidate in this situation. that would certainly seem to be in your favor, if the overall effect is to reduce your overall obligations.

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

Would i contact someone like you? Please advise.

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

you certainly may do so.

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

I own a moblie home its value is 60,000 and I wan to get money out of it with the title. How much would to intrest be if I would to get a loan for 10,000?

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

shirly, wherever you live there are likely to be lenders who grant [url=http://www.mortgagefit.com/mobile-homeloan.html]mobile home loans[/url]. check with them, first; secondly, check online with an internet search to see who'll do that kind of business. borrowing so little might make the deal more expensive. it's the kind of loan amount that isn't going to make much money for anyone to begin with, so you'll often find that the interest rates quoted are high.

you might be able to get a personal loan just as easily at a reasonable interest rate. check with local banks and credit unions.

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pat.frank | Joined: April 21, 2009 08:07 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Please tell me how a va loan works. My fico is 729. Is this type of loan used for lower priced housing? I want a loan which includes Prin, Int, Taxes, and Ins. Please Help. Thank-You, Pat

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

pat, with a va loan, you may borrow as much as 100% of the purchase price of the home. "lower priced" housing is a difficult term to decipher, as it varies depending on location. but a va loan is not specifically designed for lower priced homes, but is limited in general - that is, no jumbo loan amounts.

if you're a veteran, and you have your certificate of eligibility and your dd214, you'd qualify (it would seem). of course, qualifying also requires that you have sufficient income in addition to your credit status.

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

I am presently investing in hair salons as an owner. I have invested my life savings & now I need more cash for payroll. I have credit cards totaling $66,000 that are paying bills for the 2 salons that I opened on May 1st. Revenue is beginning to flow but not enough to cover rents & payrolls as wwll as the bills. I owe 112,000 on my home & have an income of approx. 75,000 as a teacher. I need 40,000-50,000 to get time to build up these businesses. SBAs arent available to new businesses.

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

recently i purchased 2 hair salons investing my life savings into the start up of them. I now need cash for payroll, rents & various other bills that wont take credit cards as payment...i owe 112,000 on my home that i pruchased ayear ago for 142000; i have an income of 75000 as a teacher; i owe on credit cards - personal & business approx. 63,000; i would to get 40000 to keep the salon alive as they start to bring in revenue; is this possible

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

sorry mary, but your timing could have been better. using your "life savings" was probably a bad move. it would seem you lack equity to take enough money out of your home at this time, and your lack of cash flow certainly isn't going to convince someone to lend you $40K.

i'd say it'd be wise to contact the small business administration - i sure hope you've got experience in the salon business.

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

Hi Jessica:

I have 85K saved for a down paymment on a 650K home. The consensus among lenders is that I would be better off coming up with 45K more in order to make a complete 20% downpayment. Would it be a good idea to to take out [url=http://www.mortgagefit.com/second-mortgage.html]second mortgage[/url] mortgage or a HELOC on my current home (which I plan to rent out) to come up with the 45K.

What is the best option if I want to go ahead with buying a home at that price?

Mike

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eric1 | Joined: January 4, 2009 03:52 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Yes, that would be a good solution as long as you can find the right bank with the right programs to make that work.

In addition, make sure you can qualify for the new loan with all of that debt.

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