Second Mortgage a Good First Step

A second mortgage can be the first step to climbing out of debt, especially for homeowners who have bad credit. A second mortgage is a loan taken out in “second position” on a property that already has a mortgage. There are fixed-rate loans, adjustable-rate loans and home equity lines of credit (also known as HELOCs). Fixed-dollar-amount mortgages are the way to go when you need all the money at once. A HELOC is a credit line that can be drawn upon as needed up to the limit of the loan.


<b>“Bad Credit” Second Mortgages</b>
Your right to credit is guaranteed by the Equal Credit Opportunity Act. You can’t be denied credit based on race, gender, marital status or ethnicity. But how much money you can borrow and how much interest you will be charged will depend on your credit score.


Credit is easy to get and hard to control. Not using it properly will get you a low FICO score from the three major credit bureaus. Generally, a score of 680 or better signifies good credit. Scores in the 680-620 range are still considered good, but will cause creditors to take a second look before lending you money. 620 and lower, and you are in the bad credit range.


Here are some indications that you are in bad credit territory:
- You have to apply for new credit cards to pay off old ones, thus rotating but not retiring your debt.
- You can only make the minimum payments on your loans and cards each month.
- You are at the limit on all your cards and accounts.
- You have to get subprime financing when you need to borrow money.


<b>Improving Your Financial Situation</b>
It’s a catch 22 that getting a bad credit second mortgage can lower your FICO score initially, but it can also help raise it in the long run—if you use the money to pay off high interest debts. This new loan doesn’t reduce your debt; it just restructures it to help you get back on your feet financially. An added bonus is that the interest you pay is tax deductible. The IRS says joint filers can deduct all the interest to a maximum of $100,000 on home mortgages.


It’s easy to shop and compare bad credit second mortgages online at reputable sites like www.badcreditsecondmortgages.com. The no-obligation application process is quick and confidential. Interest rates are still relatively low, but might rise in 2006, so now is a great time to see if a second mortgage is a good financial move for you.

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1st And 2nd Mortgage Refinance Loan - Consolidate 1st And 2nd Mortgages Into One Low Payment

Refinancing both your first and second mortgages will result in one low monthly payment that could save you thousands in interest charges. By combining both mortgages, you qualify for lower rates than if you refinance separately. You can see a significant savings with your second mortgage refinance, which is often several points higher than your first mortgage rates. You will also save on application fees and other closing costs.


Strategies To Lower Your Mortgage Payment


You have a couple of options to lower your mortgage payment when refinancing. The first choice is to find a low rate mortgage. So even if you choose the same length for your loan, you will still see a savings in your monthly mortgage bill. Adjustable rate and interest only loans will give you the lowest payments, at least at the beginning of your home loan. But a fixed rate loan can also give you reasonable rates with security that they won’t rise in the future.


The other option is to extend your loan term, especially in the case of your second mortgage which usually is for five to ten years. By consolidating your loans to a thirty year loan, you lengthen your payment schedule for principal, so you have a smaller payment. However, your interest rate and charges will be higher than with a shorter term.


Getting The Best Loan


Once you determine the type of loan and terms you want, do your shopping for a good lender to save even more money. Lenders will vary in how much they charge for closing costs and interest rates. The APR will tell you how loans compare overall, both in terms of rates and closing costs.


But if you are planning to move or refinance again in the future, then be wary of paying high closing costs. Even if they secure you a lower rate, you will only see a savings if you keep the mortgage for several years.


Don’t base your lender decision based on posted loan rates. Ask for a personalized loan quote based on your general information. With more accurate numbers, you can make an informed choice as to who has the best financing for you.

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Home Equity Loans The Best 2nd Mortgage for Financing Home Improvements

Tired of looking at those avocado green kitchen appliances?  The wood paneling and shag in your family room?  The worn fiberglass tub enclosure in the guest bath?  Home improvement is sweeping the country.  Approximately half of fixer-uppers are do-it-yourself, while the other half is contractor driven.
So how do you decide when to move or stay around, when a home remodel is a good idea or not?
“The American Homeowner Foundation estimates the total cost of moving to be at least 10 percent of your home's current value. In other words, if you can make things right with your home for less than 10 percent of what you could sell it for, it makes sense to stay put and fix it up.”
There’s a couple of ways for you to start the transformation of your home.  If you have enough equity built up for the total cost of the project, a traditional home equity loan might work for you.  Benefits of home equity loans often include a better interest rate.  You might even lower your mortgage payment while increasing the value of your home.
For the do-it-yourselfer working toward several small projects, a home equity line of credit allows flexibility.  The lender basically sets up a line of credit based upon the equity in your home.  The, issues you checks or a credit card to draw from the account as you need the cash.
Simply make sure refinancing your home makes financial sense says Lori Vella a senior banking executive.  "Improving your home is almost always a smart investment, especially in this rate environment. Just make sure you'll be in the home long enough to recoup the cost of refinancing," says Vella.
A 2004 survey by Remodeling Magazine compares construction costs to likely return on investment (ROI) at resale.  RM sent surveys to 20,000 appraisers, sales agents, and brokers.  Those industry insiders generating 356 responses (a 1.78% response rate). 
The RM survey shows minor kitchen remodels do the best, returning 92.9 percent of your investment, followed closely by new siding at 92.8 percent.  The survey also lists bathrooms, attic bedrooms, deck additions and family or sun room add-ons as lucrative investments.  Most of those remodels returned 80% to 90% for the home owners.
A home remodel is one of the best ways to improve the value of your home.  Financially speaking, a home-equity loan could allow you to lower your mortgage payment, lower your interest rate, and when the remodel is said and done add thousands of dollars to your net worth.
Don’t forget to check with your local utility company if you want to improve the energy efficiency of your home.  Most offer an energy efficient mortgage program.
If purchasing a fixer-upper is what you looking to do.  HUD has a 203(k) program designed to finance both the purchase of the home and the remodel costs in one easy mortgage.  Most mortgage lenders offer access to the HUD 203(k) program.

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1st And 2nd Mortgage Refinance Loan

Refinancing a first and second mortgage requires some extra considerations. Depending on your equity, you may find that combining the two mortgages results in a higher interest rate. You may also find that you have to carry PMI with the refinanced mortgage.
Will Refinancing Benefit You?
Refinancing two mortgages allows you to consolidate your loans into one payment, often lowering your monthly bill. You may also find lower rates under the right circumstances.
Those with a large amount of equity benefit most from consolidating loans since they qualify for the lowest rates. It is important to look at interest savings, not just monthly numbers which can be misleading.
However, if you have less than 25% equity, you may end up qualifying for higher rates. With less than 20% equity, you will also have to pay for private mortgage insurance. Even with these factors, you may still find that you will save money by refinancing.
Have You Done Your Research?
To see if refinancing makes sense for you, research mortgage lenders. You can quickly go online and request quotes and terms. Look at the different offers, and work out the numbers. An online mortgage calculator can help you figure out monthly payments and interest costs.
An easy way to compare cost is to first add up your interest payments for both mortgages. Use this number to compare interest payments with each potential mortgage.
You also need to factor in the cost of refinancing. Just like with your original mortgage, you will have to pay fees and points. You want to be sure that you can recoup these costs with your interest savings.
Why Do You Want To Refinance Both Mortgages?
While refinancing both mortgages is convenient, you may decide to refinance only one or both separately. With your main mortgage, you can expect to get low rates.
A second mortgage will usually qualify for higher rates, but you can lock them in. You may also choose to convert from a line of credit to an actual mortgage. Again, you will want to investigate financial packages before signing up with a lender.

Read More

1st And 2nd Mortgage Refinance Loan - Consolidate 1st And 2nd Mortgages Into One Low Payment

Refinancing both your first and second mortgages will result in one low monthly payment that could save you thousands in interest charges. By combining both mortgages, you qualify for lower rates than if you refinance separately. You can see a significant savings with your second mortgage refinance, which is often several points higher than your first mortgage rates. You will also save on application fees and other closing costs.

Strategies To Lower Your Mortgage Payment

You have a couple of options to lower your mortgage payment when refinancing. The first choice is to find a low rate mortgage. So even if you choose the same length for your loan, you will still see a savings in your monthly mortgage bill. Adjustable rate and interest only loans will give you the lowest payments, at least at the beginning of your home loan. But a fixed rate loan can also give you reasonable rates with security that they won’t rise in the future.

The other option is to extend your loan term, especially in the case of your second mortgage which usually is for five to ten years. By consolidating your loans to a thirty year loan, you lengthen your payment schedule for principal, so you have a smaller payment. However, your interest rate and charges will be higher than with a shorter term.

Getting The Best Loan

Once you determine the type of loan and terms you want, do your shopping for a good lender to save even more money. Lenders will vary in how much they charge for closing costs and interest rates. The APR will tell you how loans compare overall, both in terms of rates and closing costs.

But if you are planning to move or refinance again in the future, then be wary of paying high closing costs. Even if they secure you a lower rate, you will only see a savings if you keep the mortgage for several years.

Don’t base your lender decision based on posted loan rates. Ask for a personalized loan quote based on your general information. With more accurate numbers, you can make an informed choice as to who has the best financing for you.

Read More

Understanding Credit Scoring On Mortgage Refinancing or Second Mortgage Loans.

For years, lenders have utilized "credit scoring" to determine whether or not an individual is a good credit risk.  Credit scoring has recently become a hot topic, due in large part by the mortgage lending industry's willingness to use the process to evaluate one's likelihood of repaying home mortgage refinancing or second mortgage loans.  Even insurance companies use credit scoring as part of their underwriting procedure when writing automobile and home insurance coverage. 

Credit scoring is a system, based on a statistical program, which awards points for certain factors that help predict who is most likely to repay a debt, such as a mortgage refinancing or second mortgage loan.  The total number of points, or score, is what lenders use to determine an individual's creditworthiness.  A large random sample of customers is taken, and analyzed statistically to identify characteristics relating to credit risk.  These factors are then given a weight based upon how strong a predictor they are of who would be a good credit risk. 

Credit scoring models do vary from lender to lender, but most generally include the following factors:

1)    Your current amount of debt as compared to your potential total available credit.

2)    Payment history on current and previous accounts.

3)    The length of your credit history.

4)    The number of credit inquiries (each time a creditor pulls credit in response to your application).

5)    The number of separate open accounts.

6)    Collection actions including judgments, repossessions, foreclosures, and bankruptcies

Using the statistical program, lenders compare this information about you to the credit performance of other consumers with similar profiles.  Therefore, it is usually more reliable than a subjective or judgmental decision, because it is based on real data and statistics.  Although it may seem somewhat impersonal, when used properly, credit scoring can allow creditors to evaluate credit applications faster and more accurately than individuals, in an impartial and unbiased manner. 

In addition, the home mortgage refinancing and second mortgage loan process has been shortened as a result of the speed in which mortgage lenders can now make decisions utilizing the credit score model.

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1st And 2nd Mortgage Refinance Loan

Refinancing a first and second mortgage requires some extra considerations. Depending on your equity, you may find that combining the two mortgages results in a higher interest rate. You may also find that you have to carry PMI with the refinanced mortgage.

Will Refinancing Benefit You?

Refinancing two mortgages allows you to consolidate your loans into one payment, often lowering your monthly bill. You may also find lower rates under the right circumstances.

Those with a large amount of equity benefit most from consolidating loans since they qualify for the lowest rates. It is important to look at interest savings, not just monthly numbers which can be misleading.

However, if you have less than 25% equity, you may end up qualifying for higher rates. With less than 20% equity, you will also have to pay for private mortgage insurance. Even with these factors, you may still find that you will save money by refinancing.

Have You Done Your Research?

To see if refinancing makes sense for you, research mortgage lenders. You can quickly go online and request quotes and terms. Look at the different offers, and work out the numbers. An online mortgage calculator can help you figure out monthly payments and interest costs.

An easy way to compare cost is to first add up your interest payments for both mortgages. Use this number to compare interest payments with each potential mortgage.

You also need to factor in the cost of refinancing. Just like with your original mortgage, you will have to pay fees and points. You want to be sure that you can recoup these costs with your interest savings.

Why Do You Want To Refinance Both Mortgages?

While refinancing both mortgages is convenient, you may decide to refinance only one or both separately. With your main mortgage, you can expect to get low rates.

A second mortgage will usually qualify for higher rates, but you can lock them in. You may also choose to convert from a line of credit to an actual mortgage. Again, you will want to investigate financial packages before signing up with a lender.

Read More