Home Equity Loans – second mortgage

Veritas et Aequitas () asked:


Okay I asked this question before, however I wasn’t clear on some things.

My mother passed away recently and there is a home that I have been making payments on using her money from a joint account. That money has run out. I will be named executor in a few days, however a mortgage payment is due at the same time.

I do not want to put any money into the home not having any security. She has massive medical bills (even with insurance) and some other unsecured debt.

I want to keep the home and it has supposed equity however it wouldn’t sell for more than what is owed on the home so there is no actual equity, more so because last in 2005 she took out a second mortgage for home improvements.

I want to keep the home and I will pay off the home in full, however not at the expense of being held liable for her debts. It would break my heart to not have time to grieve and go through her belongings.

I will be talking to counsel soon however I am losing my mind in the moment, it’s too much.
They can take everything if they want, because my mother’s soul doesn’t reside in her belongings. I just know in the end they won’t get anything because of obligations before them such as tax and court fees, etc. There is no money to pay them.

DAVIS

Dina Wilson asked:


When you obtain a home equity loan, you are borrowing money by using equity in your home as collateral. Equity is the difference between the appraised value of your property and the amount you owe on your mortgage. Home equity loans online, also known as a second mortgage, provides you with a fixed amount of money, repayable over a fixed period of time.

A benefit of home equity loans online of credit is that the approval process is less stringent than other loans. However, a lender will still look at your creditworthiness and the market value of your home. A home equity loan of credit often allows for a higher percentage of the appraised value to determine the maximum amount of the credit. Also, closing costs are usually lower than a home equity loan. In fact, there is so much competition that many lenders offer home equity of credit with no closing costs. Beware that these loans may have a higher initial interest rate, so compare the APR carefully.

Interest rates on home equity loans online are typically fixed, although there are variable rate programs available. The term on these types of loans can vary in between 5-25 years. The process of borrowing for these loans works similarly to a first mortgage. The lender will have to qualify you by looking at your liabilities, assets, and creditworthiness, as well as appraising your home.

Now, you find a straight answer of all your financial queries in home equity loans online. To qualify for this loan, borrower is supposed to bid any of his assets as a guarantee of the loan amount. In this way, the borrower shares the risk factor with the lender and gets lower interest rates in return. The whole concept of collateral signifies that the lender can realise his loan amount with that of assets of the borrower, if the repayment is not made in time.



MITCHEL

Alan Lim asked:


 

A loan taken out for the purpose of transforming the equity in your house into cash that can be used for other purposes is known as a home equity loan.  A loan taken with the equity in your home as collateral can be structured in many ways. It is actually a second mortgage in many ways, and will result in less of your home’s value being accessible should you decide to sell the property.  It is an excellent way to obtain access to a sizable amount of cash, depending on the amount you owe on your home and the market value of your home.  The difference is your home equity.

 

Advantages

 

Most borrowers determine that the home equity loan works to their advantage.

 

Single Payment

 

Using a loan against the equity in your home as opposed to trying to take out a combination of personal loans and increased credit card debt means that you will only have one payment monthly for the loan rather than a half dozen or dozen small ones.  The home equity loan as a single unit is probably going to be easier to obtain than numerous smaller loans all at the same time.  You only need remember the due date and amount on one loan and thus you can prepare for and budget well into the future.

 

Available Cash

 

When you take out an equity loan on your home, it usually results in a larger amount of cash available to you all at once.  No matter what the reason for the lump sum cash is, having it in one sum often serves as a way to give you a clean start from financial problems that are eating away at your financial freedom and at your sanity.

 

Disadvantages

 

It is important that you not lose sight of the disadvantages of the loan against home equity.

 

Increased debt

 

When you obtain a home equity loan, even if it is to pay off other debt, you will almost always increase the total amount of debt that you owe.  You should study carefully whether the increased debt is offset by the advantages that a single payment–possibly smaller in size is worth going even further into debt.  If your goal is to change the ability of your family to meet future obligations or to add to the debt load as an investment toward the future, such as paying for a college education for yourself or your family, the debt load may be justifiable.

 

Economy of the area

 

Before taking out a home equity loan, it is important to look realistically at the area’s economy.  If housing prices in the community or in your neighborhood are beginning to fall, obtaining an equity loan to improve your home so that you can sell it and move on may not be a good idea.  You may find that the increased asking price necessary to clear the loans on your house will mean no buyers will be able to qualify to purchase your house.

 



DREW

Lee Traupel asked:


It is important to note that there is no real difference between home equity loans and the second mortgage. A home equity loan is commonly referred as a second mortgage financing in most states throughout the United States.

A second mortgage financing package allows you to tap into the equity available in your home. It is done without any refinancing of the first mortgage and hence it is an additional source to get money when needed. If you need cash in a lump sum that too in a lesser time and at a low interest rate then second mortgage will be your automatic choice.

A first mortgage loan and second mortgage loan are two entirely different kinds of loans. The first mortgage is essentially the loan you take to buy a home. The amount applied as first mortgage loan is very high and the interest rates are fixed. After making a bulk payment as down payment you will have to pay the remaining amount in installments – the bank fixes the installments period on the front end of the contract.

A second mortgage is the loan taken against your equity that is secured against the loan. It is usually taken when a certain amount of money is needed in bulk and on an urgent basis. You and your creditor fix the mode of repayment and you may pay it back in installments or as a lump sum in most cases.

The second mortgage is taken when you need a certain amount of money in bulk and for an immediate need. Some of the reasons for applying for home equity loans are:

• For college tuition

• Paying of credit card bills

• For a vacation

• Other debt consolidations

• Emergency needs

All kinds of loans can be consolidated through the process of debt consolidation. The interest rates in the case of first mortgage are lower than the interest rate applied in second mortgage. Since the amount of loan in first mortgage is higher and the payment period is longer, the interest rate is lower – a second mortgage is just the opposite, with higher interest rates and a shorter pay off period in most cases.



ROYAL

amanda p asked:


Our home is in foreclosure and to help us save it, my parents want to take out a home equity loan. The thing is the bank gave us a payoff amount of $205,000 for both loans ($165,000 for the 1st and $40,000 for the 2nd). My parents want to pay the 1st mortgage with the loan and we will leave the second mortgage with our mortgage company. I was wondering how that would work as far as the Deed goes? Is it even a possibility? We just want to keep this home and if they were able to do that, it would make our payment very manageable, since we are caught up in the whole sub prime mortgage problem. Any guidance would help. Thanks so much!

MELVIN

HouseHelp911 asked:


I was not informed of the possibility of a sale until 12/5/07 and then only by email, which gave me only three-business days notice I did not know what to do, To make it worse she left the office early that Friday at 1:30 and they could not be reached over the weekend per their email. Every phone call I made from 12/5/07 on was delayed by the office telling me to hold on as they “must contact the lender and get back to me” they even stopped returning my calls on the day of the sale. While on the phone waiting to hear from the lender; he is auctioning off my home. Currently 150k in equity I was only behind 9k. I believe they did this to lead me on until the sale was over.
I was told there were no other bidders and my lender bought my house for himself. Now my lender wants to rent my house
help.I was delinquent on my second mortgage and I do not dispute any fault on my part for being in this position I was lied to by the lender. Help
as I stated I was current on the first. they didnt send proper notice. Every phone call I made from 12/5/07 on was delayed by the office telling me to hold on as they “must contact the lender and get back to me” they even stopped returning my calls on the day of the sale. I believe that they did this to lead me on until the sale was over. On the day of the sale I had a friend contact the lender as she was ignoring my calls and she claimed to my friend that she had never made any offers to me and had informed me of the pending sale when I gave her the $1000.00 on 11/14/07, that lying (^&%$#@!). I also asked for 2 extra days and payment would have been in full.
Im not asking for pitty just understanding.
The bank told me as long kept my first mortgage current we would be able to do a forbearance agreement without notice they sold.

LOUIE

goodcarol2003 asked:


going on the title…IF we separate say the home is worth 260,000.00, the 1st mortgage is 123,000.00, the second mortgage which I am holding is 130,000.00…would it be fair to subtract from 260,000.00 minus 123,000.00 equals 137,000,.00 minus my 2nd mortgage which would leave in equity 7,000.00, for him…say the home increased in price to 400,000.00 divide by 2 (split) = 200,000.00 and deduct his mortgage from his half ( in the prenup it states its his 1st mortgage since I paid my half) and I get my 130,000.00 plus 200,000.00……to me this isn’t fair I think we should deduct the 1st and 2nd mortgage off the 400,00.00 and then split…..I don’t want ruin the guy like his first wife. Hope I explained this properly.

MORGAN

Joseph Kenny asked:


When it comes time to get the money you need to renovate your home, you have some choices to make concerning the financing of it. Both ways, either refinancing your first mortgage, or a home equity loan, will give you access to your equity. After that, though, a number of differences will clearly stand out. Here is what you need to know about these differences so you can intelligently choose the best one for your needs.

Features Of Refinancing Your First Mortgage

By getting a cash out mortgage, you can replace your first mortgage and obtain your equity. This means that you will have to pay the fees again that you paid when you bought the house in the first place. However, if you wait until the interest rates are down, you can get a better deal than you had before. The amount that you can gain could easily offset the costs of refinancing and save you thousands of dollars over the life of the new mortgage.

The interest rate for a first mortgage is always lower than what you would get for a second mortgage – which makes this the ideal choice. You also will have only one payment each month, which you could even make lower than what you have now by extending the time length on the mortgage. If you already have more than one mortgage, then this is also a good way to consolidate them and get your equity at the same time, as well as reduce your monthly payment.

If you currently have an adjustable rate mortgage that is about to run out of the fixed rate portion, then this should be the way you would want to go. Not only will it give you level payments with a fixed interest rate, assuming you get a fixed rate mortgage, but also your equity for the upcoming renovation project you have in mind. This means you could take care of more than one problem at once.

Features Of A Home Equity Loan

A home equity loan is considered a second mortgage. This means it will give you an additional payment each month. If you can afford the extra payment, this may be the way you want to go. It will also have a higher rate of interest than a first mortgage, and usually has a time frame of up to 15 years for repayment.

You can take out your equity but need to leave enough in there that is equal to 20% of the value of the house. This is true with any kind of mortgage, since you may need to pay private mortgage insurance if you go over this amount.

A home equity loan is mostly fixed rate, but some may also be adjustable. Your loan payments are fully amortizing, and money used for fixing up your home is often tax deductible. This type of loan is seeing some new variations come out recently, so you will want to see what is out there before you choose.

The Choice Is Yours

Obviously, only one of these choices will best meet your needs. After you choose a course to take, you will then want to get a few quotes – whether you choose to refinance, or get a home equity loan. You will need to look them over carefully and consider all aspects in order to find the one that is best for you.



PARKER

HouseHelp911 asked:


I was not informed of the possibility of a sale until 12/5/07 and then only by email, which gave me only three-business days notice I did not know what to do, To make it worse she left the office early that Friday at 1:30 and they could not be reached over the weekend per their email. Every phone call I made from 12/5/07 on was delayed by the office telling me to hold on as they “must contact the lender and get back to me” they even stopped returning my calls on the day of the sale. While on the phone waiting to hear from the lender; he is auctioning off my home. Currently 150k in equity I was only behind 9k. I believe they did this to lead me on until the sale was over.
I was told there were no other bidders and my lender bought my house for himself. Now my lender wants to rent my house
help.I was delinquent on my second mortgage and I do not dispute any fault on my part for being in this position I was lied to by the lender. Help

ERICH

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