Home Equity Loans – second mortgage

jafang123 asked:

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Peggy

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Thomas

jaytyaes asked:

Information about mortgages, mortgage rates, home refinancing, home equity loans and many other mortgage related topics.

Charlotte

Rebecca Oconnor asked:




According to a Federal Reserve Bank report published in 2002 thirty-five percent, the biggest share, of home equity loan dollars goes back into the borrowers house through home improvements and maintenance projects. Considering the benefits and the ease of leveraging the equity you already have through a second mortgage or mortgage refinancing, this is hardly a surprise. ”The cake itself is the equity, and that is the important part of ownership,” Richard Wakelin, of Wakelin Property Advisory. If you are smart about building equity you can earn it even faster and with less investment. Some of the best ways to increase equity are simple such as:

1. Buying a home in the right neighborhood is critical. If the real estate values are rising, you could build equity without doing anything more than holding on to the property.

2. Curb appeal is key to raising a home’s value. It doesn’t take much money to install irrigation and landscape a property, but the first impression from the outside can be worth a lot. If you have some equity in your property already, a home equity credit line may be a better way to fund these smaller improvements than using a credit card. The interest is lower and so are the payments.

3. Remodel the kitchen if you really want to increase the value. Buyers are willing to pay more for a home with a gorgeous cook-friendly kitchen. If you are looking to do a remodel, mortgage refinancing is a good way to cash out on the equity that you already have and invest in building further equity. (Likely with a tax break on the interest as well.)

4. Master bedroom and bathroom improvements are also a good way to increase equity and can also be paid for through a refinance.

5. Don’t forget small improvements with “sweat equity” either. Just a little bit of capital and a lot of muscle can greatly improve a home through painting, wall papering and other do-it-yourself upgrades.

A little bit thought and effort can go a long way in making your property your best investment!

Stacey

Demontay544678 asked:

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Jared

Joseph Kenny asked:


When you need the cash out of the equity of your home you may wonder which one is better for you – a cash out mortgage or a home equity loan. The truth is that both have their advantages – but probably one will be better for your situation than the other. This will mean that you need to know a little about each in order to make up your mind. Here are some differences between the two.

A cash out mortgage will involve refinancing your first mortgage. This could be a great way to go, especially if you can get interest rates on the refinance that are at least one percent (two percent is to be preferred) lower than your present mortgage rates. So not only could you get the equity you want, but also you will save thousands of dollars by getting better interest rates, too.

You get the equity you want in a lump sum when your cash out mortgage is approved. All you need to do is to refinance for the amount of the mortgage that is still outstanding, and add the amount of cash you want from your equity. You will want to watch and make sure that you do not refinance for an amount equal to 80% of the value of your house – that includes the equity, as well. The reason for this is simple, you want to make sure that 20% of the value of your home is left intact so that you do not need to pay the Private Mortgage Insurance. This could add thousands of dollars each year to your payments.

You can enjoy further savings if you decide to shorten the term length, too. If you make the remainder of the refinanced loan to be about 5 years less than what you have now, you could literally save tens of thousands of dollars more over the life of the mortgage.

A home equity loan is another way to get to the cash in your equity that you want. A home equity loan is a second mortgage, and you may be able to get it as either an adjustable rate mortgage or a fixed rate mortgage. While it obviously does not require you to refinance your first mortgage, it will give you a new monthly payment – and the cash you want. As a second mortgage, there will also be closing costs and other fees – with the possible exception of going through your present lender.

The interest rate will be higher than on a first mortgage, when you get a home equity loan. The interest rate, as well as the amount you can borrow, will depend mostly on your credit rating, and your ability to repay the loan. Make sure your credit report is accurate before you apply. If there are inaccuracies on the report it can hurt you and give you higher interest rates than you might have otherwise, or even cause your home equity loan to be rejected.

Before you agree to either a home equity loan or a cash out mortgage, you will want to shop around to find the best deal. It will take some time to do it right – but you are the one who will benefit from the savings. Check the various features, such as the interest rate, the fees, and the terms of repayment – including the monthly payments.

The choice is now yours. It can basically be summed up as – do you want to refinance your existing mortgage, or get a second mortgage? Both have their benefits, but only you can decide which one will work best for you.



MITCH

Amanda Hash asked:


Many advise to obtain a cash-out refinance loan when you are in need of cash and you want to obtain inexpensive funding. However, under certain circumstances it is smarter to resort to second mortgages as these loans can provide equally inexpensive funds without altering the conditions of the previous mortgages.

Second mortgages are home equity loans which use the remaining equity on your home to guarantee repayment. Thus, the previous mortgage loan remains unaltered as only the remaining equity is used and not the one used to guarantee the mortgage loan balance. This is particularly important under certain circumstances when the outstanding mortgage loan has very advantageous terms and it makes no sense to refinance it.

Second Mortgages and Home Loans

Second mortgages are loans based on equity that use only the exceeding equity that is not guaranteeing the outstanding mortgage loan as collateral. Thus, with a home equity loan you can obtain additional cash out of your property just like with cash-out refinance home loans but you do not need to touch your outstanding home loan.

Compared to home loans or first mortgages, second mortgages charge slightly higher interest rates and do not offer such advantageous terms. With a home equity loan or second mortgage you will not be able to obtain repayment schedules of up to 30 years like with home loans but you can get up to 15 years without difficulties.

When to Resort to Second Mortgages

Cash-out refinance loans are an excellent option. They provide all the funds you need while refinancing your outstanding mortgage balance. Besides, as home loans they provide very advantageous terms. And you end up with a single monthly payment instead of having two payments like you do with second mortgages.

However, this is true only if your new refinance home loan has better or similar terms as your previous mortgage. Otherwise, refinancing your home loan may not be to your advantage and the cash you obtain from a cash-out refinance home loan may turn out to be significantly expensive compared to getting additional funds with a home equity loan or second mortgage.

For example: If you obtained your current mortgage loan under good credit and market conditions and thus you have a fairly low interest rate, chances are that by refinancing your home loan and due to the fact that you want to obtain additional cash via a cash-out refinance home loan, you will end up paying a higher interest rate.

If the amount of money you still owe on your mortgage loan is significant, you may end up wasting thousands of dollars more towards interests and you need to ponder that when you analyze the costs of refinancing. Instead, with a second mortgage, you are just paying interests for the money you are actually requesting and not also for the amount of your outstanding mortgage that remains with the same interest rate and fees as always. Thus, when analyzing whether you should go for a second mortgage or a cash-out refinance home loan you need to take into account APRs, Outstanding balances and the costs of each financial transaction.



BERNIE

Melissa Kellett asked:


If you have a mortgage loan and you have requested a home equity loan too, you can refinance both loans and get a single loan and a single monthly payment with the same or better terms than the average of both outstanding loans. This can be achieved by applying for a refinance mortgage loan.

Home equity loans, also known as second mortgages, are secured with the same asset as the primary mortgage loan, thus, when refinancing the home loan, you can include your home equity loan. This can provide you with many benefits like getting fewer monthly payments, saving thousands of dollars on interests, getting lower installments and reducing your overall debt exposure.

Refinancing: Concept

As you probably know already, refinancing consists on acquiring a mortgage loan in order to repay an outstanding mortgage. This can be done because the loan contract specifies that the money will be used to cancel the outstanding loan so the new loan will be the primary beneficiary of the security.

The home equity loan is, in this case, also replaced with the new loan and the new loan amount will be determined by adding up the previous mortgage loan amount and the home equity loan amount.

Saving Money? Getting Ease?

By refinancing you can save thousands of dollars on interests. Home equity loans generally come with higher interest rates than mortgage loans and thus, by obtaining a lower rate refinance home loan you will not only be saving money on your mortgage loan but you will also be saving even more money on your home equity loan.

Also, by refinancing you will unify both loans and get a longer repayment program and lower monthly payments. The resulting loan installments will be undoubtedly lower than the combination of mortgage loan payments and the home equity loan payments. Thus, even if you are indebted for a longer period of time you will get a lot of ease on your financial situation and income.

Refinancing Other Debt: Cash-Out Refinance Loans

A cash out refinance loan is a refinance loan with a higher amount than the outstanding mortgage loan and in this particular case than that of the mortgage loan and home equity loan combined. Once both loans are cancelled, the surplus can be used for any purpose you may think of, including reducing your overall debt.

If you have other debt like credit card balances, personal unsecured loans, pay day loans, student loans, car loans or any other loan, you can use this surplus to cancel your debt and thus, you will be saving money due to the lower interest rate that refinance mortgage loans feature.

This will improve your overall credit situation raising your credit rank and improving your credit history. Your debt to income ratio will also be improved just as your debt exposure. Using a cash-out refinance loan in this way is a smart thing and will do a lot to enhance your whole financial situation. Your ability to get finance will also increase since on your credit report, only a single outstanding and affordable loan will show.



RODRIGO

Andrew Bicknell asked:


A mortgage refinancing home equity loan is simply a loan that you take out to pay off an existing mortgage with a new loan that is more financially friendly to your financial goals. The purpose of this type of loan should be to help you save money.  To do so you should consider the implications of total interest costs, annual percentage rates and repayment period of your home equity refinance mortgage loan.

Refinance of your home loan at a good refinance rate can open up a lot of possibilities.  Depending on the refinance plan you choose, you can either save the extra money through rate and term refinancing, or get the cash immediately with cash-out refinance.  Since you are getting money through refinance that you would ordinarily be spending on your loan repayments, it makes a lot of sense to invest that money back in you property in order to raise its overall value.

You can choose to use a mortgage refinance cash out amounts for any personal purposes based on your needs. Making small or large improvements around your property can drastically increase your home equity.  Whether it’s interior improvements, an addition, landscaping, or simply restorations, you will surely enjoy the benefits of the higher home equity long after work is completed.  Additions are always a good bet for increasing home equity.  Landscaping can also go a long way towards making property more desirable, and therefore should not be overlooked as a way to spend home equity refinance money.

Mortgage interest rates are determined by several factors, such as the down payment being made, credit score, loan amount applied for, and the policies that the lender follows. When you refinance your mortgage, you may be pleasantly surprised by the low mortgage rates or your ability to reduce your monthly mortgage payments.  When applying for a home equity mortgage refinancing loan make sure that you deal with a lender that offers you the best terms at lowest rates.

Your credit report will show them your credit history, whether you’ve paid your bills on time and who you may be in debt to.  It is advisable to carry out a credit check before you refinance your home equity loan, although too many inquiries can lower your credit score.  If you have a poor credit, there are still lenders who may refinance your home equity mortgage loan.

Consider the following prior to applying for a home equity refinance: Ask your lenders about transaction fees, points and closing costs.  If these fees are exorbitant, it may not be cost effective to refinance your home equity loan.  If you plan to stay in your house for a short period of time it normally doesn’t make sense to refinance.

If you are thinking of doing a home equity refinance then do some research and get at least four quotes from reputable lenders to see which package may work best for you.  Make sure you get multiple quotes, because shopping around can save you a lot of money. With risk free quotes, you can learn about loan costs without hurting your credit score.



REGINALD

Joel Cohen asked:


There are many types of loans suitable for home improvements, however, the one known to be the most popular one is a Home Equity Loan. Any one who has applied for a mortgage and has available equity that can be cashed out may apply for a home equity loan through an equity lender.

A home equity loan will is also a way to get cash for other expenses like: paying for medical bills or for college tuition. The rates offered by most lenders are relatively low, because of the home acting as collateral.

You must have a fixed monthly income in order to be able to liquidate your equity. Very few lenders will agree lending money to a person that doesn’t have a job because they can’t know if you one will be able to pay the loan back on time. In order to get the best home equity loan rates, make sure you have a high credit score and if possible – shorten the loan’s repayment term.

Home Equity Loans for People with Bad Credit Scores

Although this type of loan is a secured loan meaning that the lender isn’t in a high risk when lending a person the money, bad credit ratings have a negative impact on the loan’s interest rate. A home equity loan for bad credit ratings can be obtained through sub-prime lenders and by shortening the payment term – one might find lower rates.

Compare Home Mortgage Lenders for the Lowest Rates

Home Mortgage Lenders often offer additional services such as mortgage refinancing, debt consolidation loans and home equity loans. By comparing several equity lenders online you will eventually find the best rates and home equity loans options. Bad credit home equity loans will be helpful for any consumer with credit problems.



RICH