Second Mortgage - Information that you can use
June 6th, 2013
| Indianapolis Mortgage
When it comes to taking out a loan for various purposes such as home improvements, car repairs, paying off debts, investment in another property and so on, many people take out a second mortgage more commonly known as home equity loan or home equity line of credit. You can get a second mortgage from an online easy loan lender. Generally second mortgages are more popular as compared to personal loans because these have lower interest rates being secured loans, where your house is the collateral. this means any inability to pay back the loan will result in your house being seized to pay back the loan. thus you should do proper research before taking out a second mortgage and see if the risk is worth taking.
· Find out the payments - The first thing you need to decide is whether the payments are affordable. The idea is tempting but if you cannot handle it, it will result in serious loss, both financially and otherwise.
· Determine the amount of equity in your house - A home equity loan or line of credit is given based on the equity you have built up on your home by making your mortgage payments on time. It is the value of difference between how much of your first mortgage you owe and the value of your house. you should make sure that this equity is covering the amount you are taking out on second mortgage.
· Take an account of your credit score - The interest rate you get on your loan depends upon the credit score you have. Higher your credit score, higher is your creditworthiness and thus lower is your interest rate on loan. Thus obtain your credit score and determine whether it is good enough to apply for second mortgage.
· Consult with your current mortgage company - You should have a talk with your current mortgage company about how you can take out a second mortgage on your home. It is advisable to start with a lender that you are comfortable with. Since you already have a working relationship, they would be able to guide you better.
· Check for lower rates - Once you have obtained the rate from your existing lender, look around for other lenders who are giving a lower rate.
· Check the total cost - When you are comparing second mortgages, check the total cost that includes additional charges like application fees, charges for appraisals and closing costs.
· Read the fine print carefully - As you may already have had experience with your mortgage, you should read the fine print of your lending disclosures carefully and be aware of all the terms.
· Look out for home loans with bundled insurance - There are a number of second mortgages that comes with insurance. if you already have enough insurance cover don't get persuaded into buying a home loan with built in insurance.