Second Mortgages

Second mortgages are the ultimate home financing gadget - go go home equity!

Second Mortgages - Gadgets, Gadgets, Gadgets!

Where would we be without second mortgages! Impossible to consider the consequences! Whenever there is a financial situation that demands a significant amount of cash we can use our built up home equity and take out second mortgages to fit the bill! Incredible! We have to get to the bottom of these loans!

Making second mortgage discoveries

Now, at inspector school they taught us there was two ways to find out how mortgages work - the hard way or the right way:

• the hard way is to take out those home mortgages and see what happens - analyze the financial obligations and difficulties as they come up.
• the right way is to analyze the situation before hand, to use our better investigative judgments and guess how these loans will pan out.

Now, since your home equity is a valuable resource you cannot play around with, lets take the right way and look at second mortgages before actually applying for them. Go go mortgage calculator!

Punching digits, savings time

The first big difference you will see with second mortgages is higher mortgage rates. Curious! BUt when you think about it, the reasoning isn't that hard to grasp. The rights to your home are lined up one after the other - those in the front of the line have first dibs on your home if you fail to keep up with your monthly payments. Therefore, the lender providing you with a second mortgage is at greater risk of losing their investment because the first lender will have access to your home before the second. Ok, so we know that rates will be higher for second mortgages, but what else can effect that rate?

• your credit history means less in second mortgages than your repayment history in your first. Sporadic, late, or even missed monthly payments will create for higher interest rates
• the amount of money you are taking out in that home equity loan will effect your rates. If you have $100,000 in equity stored up and you take out $50,000 in equity its no big threat to you or your lender, but if you take out $90,000 or even $125,000 in second mortgages that increased amount is seen as increased risk and your rates will almost certainly rise.

We can use second mortgages to help finance our better, more secure, more profitable financial lives, but if we aren't careful and do all the inspections first they may take a drastic turn for the worse.

And remember, you can do a whole lot of cool sleuthing stuff with your equity. Make home improvements, consolidate debts, or simply live off your equity for years through reverse mortgages - the choice is yours, so you've gotta be sure you make the right decision or else!