Second Mortgage

You can use 125% Second Mortgage loans for debt consolidation & lower Fixed Rate Payments

A 125% Second Mortgage is a 2nd mortgage in which the face amount of the loan exceeds the value of the property by 25%. A Property valued at $200,000 would have a loan for $250,000. This is a perfect type mortgage for individuals with little or no equity in their home. The loan offers 125% of value minus the first mortgage.

125% home equity loans typically require that the borrower has good credit. However, even if your credit is less than perfect, you may still be able to qualify for a 125% home equity loan. If not, you may want to consider mortgage refinancing or a standard second mortgage loan once your FICO credit scores improve. Read the rest of this entry »

No Equity Second Mortgage Loans for First Time Home Buyers

A 125% home equity loan (also known as no equity loans, 125 home equity loans and 125 loans) is a second mortgage that requires no equity but the loan allows you to borrow up to 125% more than the current combined loan to value (CLTV) ratio of your home.

The CLTV is the proportion of more than one loan secured by your home in relation to its value. This is different than loan to value (LTV), which only involves the proportion of a single loan in relation to its value. Read the rest of this entry »

With the 125% loan, the home owner is able to borrow more than the actual value of the home.

Many mortgage industry experts believed the 125% Second Mortgage would never perform in the market. It been over 10 years since the advent of the 125% loan and as the real estate markets begin to decline, the 125% second mortgage may be destined for a comeback. The 125% loans are innovative second mortgages because they allow homeowners to borrow up to 125% of their homes’ value.

Irwin Home Equity, Trust One Mortgage, and Homecomings Financial offer the 125% second mortgage. Their underwriting guidelines are tightened, and higher credit scores with more residual income became required for loan qualification. Read the rest of this entry »

It may look like a perfect loan but be cautious when considering this loan!

A 125 loan is named for the amount of equity you can pull out of your home, which is usually 125%. Some of the loan is secured by your home and some of it isn’t, making it a mixed loan type. The portion that is unsecured causes your interest rate to be higher than with a fully secured home equity loan.

The real danger comes in when borrowers take out a 125, roll over their credit card debt and then go out and max out those cards again. This is called reloading. You now have double the debt to repay. You are in a worse situation now and are risking losing your home. Read the rest of this entry »