Get Loan Rates
The way a second mortgage works is similar to
a home equity
loan, which is a fixed rate, simple
interest loan, recorded as a second lien on the property
title deed. A second mortgage can provide access to
home equity without
Cash out from second mortgages can be
used for just about any purpose, such as home
improvement, or debt
consolidation. Paying off high interest debt, reduce
monthly payments, change compound interest into simple
interest, and save money from a possible tax deduction.
When you compare
2nd mortgage rates, terms
are usually offered in 5 year increments, ranging from
5 to 20 years. Fully
amortized, fixed rate second mortgages are scheduled
to be paid off at the end of the designated term as specified in
the loan documents,
with no balloon payment due.
mortgage rates can be
influenced by a number
of factors such as: credit scores, the amount of the
loan, debt to income ratio, your disposable income, and
the value of your home.
2nd mortgage interest payments
may be tax
deductible for a primary residence, with a limitation for
the deduction set at a maximum of $100,000 or 100%
of value. Check with a tax advisor.
The entire second mortgage
minus any closing costs, is paid in one lump sum at the close of the loan
unless there is an agreement to pay any third parties directly.
For example, a lender may require some borrowers to pay off
certain debts in order to meet the debt to income ratio. Also, if you
line of credit or home equity loan, it must be paid off
with the new loan.