Second Mortgage

Taking out a second mortgage can be a big decision but you may not want to land up taking for thirty years.

So you may think of getting 30 years loan anyways and pay it off early without penalties as you need less money. Yes you can finance it for 30 years and pay if off early.Just be sure when you go in to pay tell them you are paying extra on the principle.

If you are doing this to consolidate bills don’t.You will end up making more bills.Shop around for the best interest rates.You won’t be able to borrow all your equity value only a percentage of it. You will also have to pay closing cost and an appraiser.

However, it is much more feasable to refinance your first mortgage than take a second. However, if you are going to do this, you can shop around for terms. You can take a loan for fifteen years, which could lower your interest rate and have you pay it off earlier, but it would increase the monthly payment by a lot.

You can take one out for the thirty years, make sure there is not a pre-payment penalty though. Any loan with a pre-payment penalty is not a good mortgage. For anybody. Usually those with not so great credit get stuck with pre-payment penelties.

This would require the borrower to pay a large sum of interest if it were paid before a certain period is up. Some also include a clause which does not allow the borrower to make extra principle payments each month. Which is an absolute killer for me when evaluating a loan.

Are you aware that if you paid only an extra fifty dollars a month with your payments you knock off several years and thousands of dollars in interest over the life of a loan? This is why many companies try to inforce a pre-payment clause.

Never go with a company who wants to put that on there. If they tell you none will be there, and you get to signing the papers and find that clause there, get up and walk out. Do not sign papers when something you were told is not accurate.

They are attempting to get you over a barrel and often when you finally get to the paper signing they know most will just sign any way as they are tired of the loan process and do not want to start all over again. The thing is you don’t usually have to.

You tell them to change it or you will go to somebody else. Even if you sign it you have 48 hours to recend on it. You go back to the tittle company and they will show you what to do.

It is advisible to refinancing your first mortgage, get a good interest rate, no pre-payment penalties, and then pay as much extra you can each month. You would be amazed at how much you can save and how much earlier you can pay off your mortgage doing this. The lenders don’t want you to know about this, as it loses them interest fees.

Now, if you need to write off interest over the entire life of the loan due to a very high earned income, don’t do the pre-payments. If you are young and expect to make a lot durring the life of the loan it just may be more feasable to pay the interest and write it off on your Federal taxes each year.

This is especially true after your kids are grown and you no longer have them as dependants to take deductions and receive the child credit.

The bottom line is to look at your circumstances today, and look as best you can into the future. While we never know for sure what will occure in the future, we can make plans based on our current health, current income, and future earning power. Then just make the best decision you can.