Using a Second to Avoid Mortgage Insurance
Yes, you can avoid it and take some tax advantage of the combination loan, but this all would depend on following factors:
First, check the interest rate on the second mortgage relative to the rate on the first. Remember, the smaller the difference in rate between the two mortgages, the greater the advantage of the combination relative to the single loan. Read the rest of this entry »
Going in for a second mortgage maybe a bad idea.
If used properly, they are a great way to pay off high interest debt. Plus the interest may be tax deductible.
Of course, any increase in debt is bad. Also, unlike credit card debt, your house now secures your mortgage. If you fail to pay your credit card, your credit rating suffers. But if you fail to pay your mortgage, the bank can foreclose on your house. As long as you are capable of making the payments, you are smart to take debt at a lower interest rate. The tradeoff is that your assets are now at risk. Read the rest of this entry »
What you need to know about different Mortgages?
Home ownership has the benefit that it allows you to use your home as collateral and borrow needed money against it, by taking a second mortgage. A second mortgage is a fixed rate loan, usually a 15 year term. The rate is usually higher than that of a line of credit but the rate will not fluctuate as the prime rate adjusts.
The main two types of second mortgages include home equity loans and home equity lines of credit (HELOC). In general, a home equity loan is a lump sum loan, and a HELOC is a revolving credit line, similar to a credit card, where interest is only paid on the amount borrowed. Read the rest of this entry »
What is a Second Mortgage?
Technically, banks call it an equity payment, but a lot of people call it a second mortgage, because it is a loan against your home. The second mortgage is also referred to as an equity line of credit. It is the appreciated value of the house (equity) minus the existing mortgage amount. For instance, a person buys a home for $200,000 and he puts 20% of the total down which is $40,000. Now he owns his home but he still has to pay the bank a monthly “rent” for the privilege of living there.
He owes $160,000 on their home, but a few years later the home goes up in value as well, so now they have a house that is worth say $250,000. The difference between the $250,000 and the original $160,000 is called “Equity”. You can usually borrow a portion of that equity if you want which is called a Second Mortgage. Moreover, the banks make their money back by selling your high priced house if you default on your loan. Read the rest of this entry »