Home Mortgage Qualifying For Second Mortgage Is Easy and In Minutes – Look at How

Qualifying For Second Mortgage Is Easy and In Minutes – Look at How

5 min read

A second mortgage does not mean getting mortgage on a second property. It essentially refers to getting a 2nd mortgage on an existing mortgage of the same property in question. Should you seek second mortgage? Well, it depends upon your need and the requirements as laid out by individual lenders.

Getting a 2nd mortgage lets you encash the available equity without the need to revisit the terms of your first mortgage. So, you avoid any penalties that may be associated with the first mortgage. There are two ways you can get second mortgage. First, through Home Equity Line of Credit, HELOC, as a second mortgage following the first mortgage. Or, you can get another mortgage that is a different loan on the property.

With HELOC, you can get second mortgage worth only 65% of the home value. In addition, stringent criteria make qualifying for second mortgage a bit more difficult. On the other hand, depending on the lender you work with, you can likely get a second mortgage loan worth 95% of home value. Usually, private lenders are more flexible in terms of requirements. So, they are the best place to get a second mortgage. However, since they lend on a comparatively smaller scale, they tend to be choosy with the property they offer mortgage for.

Though HELOC comes with lower interest rates and open terms, they have stringent criteria for loan-to-value ratio. The private lenders offering second mortgage are a better bet with regard to LTV ratio, the down side is that their interest rates are higher, and they require down payment. You can find the best second home mortgages with competitive rates through mortgage professionals who work closely with these lenders.

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Usually these private lenders are a single or group of individuals who loan out their private capital as mortgages. Since, bank rules do not apply to them, they are able to offer loans with a higher loan-to-value ratio without many documents. So, qualifying for second mortgage with them may be relatively easier. However, they can charge a higher renewal fee or pay out penalty, if they so wish. It is therefore, advised that regardless of the lender that you choose to transact with, ensure that you fully understand the applicable fees you need to pay and other terms and conditions.

Getting a 2nd mortgage for a short-term will help you avoid paying higher interest rates in the end.

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