Second Mortgage What Is It Exactly


Second Mortgage What is​ It Exactly
Everyone has heard a​ friend or​ relative complain about
having to​ take out a​ second mortgage but don’t really know
what that means .​
Let’s find out!
The real term for this is​ called a​ home equity loan .​
This
is a​ common loan type that homeowners can use for whatever
they want.
A home equity loan requires that you​ use your house for
collateral just like a​ normal home loan .​
There are
different types of​ home equity loan out there and you​ can
always use the​ money for whatever you​ want.
College,​ bills,​ and home repairs are some common uses .​
You
will need outstanding credit to​ be approved for this kind
of loan though.
A closed end type home equity loan gives you​ a​ big chunk of
money immediately and you​ can’t get another loan until this
one is​ fully paid.
The amount you​ can get depends on​ factors such as​ how much
your home is​ worth,​ your income,​ credit score,​ and similar
things .​
a​ closed end loan usually comes as​ a​ fixed rate
type and allows you​ up to​ 15 years to​ pay it​ off.
An open ended home equity loan is​ a​ little different .​
This
loan will let you​ borrow money whenever you​ have a​ need for
it.
The loan lender will set up a​ line of​ credit that is​ pretty
much based on​ all the​ same factors as​ the​ closed end loan.
These usually have an​ adjustable rate and you​ can make
payment for 10,​ 15,​ or​ even 30 years.
So why are these called second mortgages Because you​ are
adding yet another loan payment that uses your house as
collateral and adding another monthly payment .​
Though
tempting,​ it​ can cause you​ a​ lot of​ problems in​ the​ future.



Second Mortgage What Is It Exactly



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