2nd Mortgage Loans - Extra Cash, Extra Risk?

2nd Mortgage Loans - Extra Cash, Extra Risk?
By Harris Fallon

A 2nd mortgage loan allows a homeowner access to the equity in his home. This is the appraised value of the property less the amount of the first mortgage. Traditionally, second mortgage loans were used to finance improvements.

Homeowners might remodel the kitchen, add a deck or finished the basement to provide a family room or home theater. The equity was used to send students to college or to provide startup capital for a small business. The second loan for most homeowners was a one-time loan meant to cover a specific purpose.

Twenty years ago only the most credit worthy individuals could qualify for a second mortgage that, when added to the first mortgage, would total more than 80% of a home's value.

When mortgage interest rates declined in the early 2000s, second mortgages became more common. A contributing factor was the housing bubble that caused home prices to rise by double digits annually in many parts of the country.

Large financial institutions began to ease the underwriting restrictions on second mortgages in the 1990's and by 2001 a homeowner could leverage 100% of the value of his home with a second mortgage loan.

The low interest rates were attractive to homeowners. It has been common for those living above their means to consolidate their debt with a second mortgage on their home by refinancing the second mortgage year after year.

In the past, a 2nd mortgage could be expected to be at a higher rate of interest than the first mortgage on a property. Variable rate second mortgage liens were offered with initial interest rates as low as 3%. Some homeowners began to use the equity in their home as a mini-bank.

They would take a 10 year second mortgage to pay off credit card debt and their monthly payments on the new loan would be substantially less than the payments made on the high interest credit cards.

However, it is important to realize that when you take a second mortgage loan on your personal residence, you are in a position of increased risk. Almost all second mortgage loans have a cross default policy.

That means failure to pay the second loan will cause the first mortgage to go into default and you may lose the home through foreclosure. In the current economy, the rapid decline in home values has meant thousands of homeowners now have first and second mortgages that are much higher than the market value of their home.

Equity in your home is like have emergency cash in a bank account. Homeowners who treat the cash generated by such a loan as an excuse for a shopping spree may find themselves struggling to keep their home.

Used wisely, a second mortgage loan is an option available to pay for medical expenses, college tuition, or to improve your property. Used unwisely, homeowners may find themselves facing the loss of their home altogether. As such, you should weigh the extra cash that you generate with the extra risk you will take on before deciding to take on a second mortgage for your home.

Harris Fallon is a Virginia based homeowner who frequently writes about mortgage loans and real estate financing for residential properties. You can read more about Virginia 2nd mortgage loans, financing tips and homeowner considerations at http://www.virginia2ndmortgage.org.

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2nd Mortgage Loans - Extra Cash, Extra Risk?

2nd Mortgage Debt Consolidation

2nd Mortgage Debt Consolidation
By Kristy Annely

Consolidation of debt mortgage loans helps you repay your debt quickly. A second mortgage debt consolidation is the process of consolidating second mortgage loans on the existing property, mainly with a view of paying off the early mortgages.

Debt consolidation mortgage loans are designed to ease your monthly repayments by consolidating all your existing debts into a single loan with a single monthly payment. Debt consolidation not only reduces interest rates, but also eliminates late fees. As the monthly payment comes down considerably with reduced rates, repayment of debt is accelerated.

The second mortgage plan places an additional mortgage on your property. You are bound by a fixed monthly payment and fixed rate of interest in the second mortgage debt consolidation. Refinancing of an existing property is possible only when there is adequate equity to do so. You can also negotiate with your lender for a stand-alone loan.

Second mortgage debt consolidation loan gives you much lower rates compared to credit card and other loan rates. Consolidation of debt with second mortgage or home equity will give you a better monthly repayment plan. A debt consolidation will help you keep your credit history on the right track.

The additional amount you make through the second mortgage is tax deductible also. The maximum amount you can borrow by the process of second mortgage debt consolidation is the total value of your home evaluated at low market value. Even if the consolidation results in an increase in monthly repayments, you could meet some current cash demand.

2nd Mortgage provides detailed information on 2nd Mortgage, Refinance 2nd Mortgage, Bad Credit 2nd Mortgage, 2nd Mortgage Loans and more. 2nd Mortgage is affiliated with 1st Mortgage Rate.

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2nd Mortgage Debt Consolidation

Bad Credit Second Mortgage Loan - Guide to Remortgaging

Bad Credit Second Mortgage Loan - Guide to Remortgaging
By Rob Small

With the housing market in decline, and fewer home loans being paid out every month, it can be especially difficult to find a second mortgage loan - particularly if you have bad credit.

A second mortgage, however, could be yours if you are able to find the right lender. And one of the easiest ways to find a suitable lender is to employ a broker.

They will search through hundreds of different lenders to find a second mortgage loan that suits you and fits with your budget. They will take interest rates, fees, charges, loan terms and conditions into account while looking for a lender who can offer a loan you are happy with.

This is much simpler and more efficient than searching for a lender directly. After all, when you contact one lender, you will only be able to compare the loans they have on offer.

On the other hand, contacting several lenders is both time-consuming and complicated. Working with a broker can make things much easier.

You can use a second mortgage loan for almost any purpose. One of the most popular reasons to remortgage is to fund home improvements. However, you may also want to switch mortgage lender or renegotiate with your current lender.

If you have bad credit, a second mortgage with lower interest rates can cut down on your monthly repayments. This can free up extra money, meaning you can save more every month.

You may want to take out a second mortgage to fund a buy-to-let purchase. You will often have to prove that the rental income will cover 130% of the mortgage payments when applying for a buy-to-let loan, so it is important that you have all your figures correct.

A broker will be able to help you when applying for a second mortgage loan. They will be available to answer all of your questions, so your application is more likely to be successful.

Whatever the purpose is, working with a broker takes the hassle out of hunting for a bad credit second mortgage loan.

Gordon Parkes is an expert author with a great interest in the financial industry. He has written extensively about obtaining a second mortgage loan and how you can benefit from a bad credit second mortgage.

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Bad Credit Second Mortgage Loan - Guide to Remortgaging

Stripping a Second Mortgage From Your Home in Chapter 13 Bankruptcy

Stripping a Second Mortgage From Your Home in Chapter 13 Bankruptcy
By Joseph Seagle

In Bankruptcy cases, specifically Chapter 11 and Chapter 13, lien stripping is an effective tool in reducing the payments made to creditors. In Chapter 13, the debtors reorganize their debts into a repayment plan whereas Chapter 11 is for businesses and individuals whose debts exceed the limits in Chapter 13.

Lienstripping is referred to as the debtors' ability to reduce an undersecured creditor's claim by valuation of the underlying collateral. This is also known as bifurcation where the undersecured creditor's claim is divided into secured portion and unsecured portion.

The unsecured portion of the lien is stripped away from the collateral and becomes an unsecured claim. For example, if a debtor purchased a commercial building with a mortgage of $500,000 and the current value of the building is $300,000.

The creditor's lien is undersecured and can be bifurcated into $300,000 secured claim and a $200,000 unsecured claim. The debtor is only required to pay back $300,000 over the life of the loan and the remaining $200,000 can by discharged at the end of a successful plan.

Under nonbankruptcy laws, the debtor is required to pay the entire amount since lienstripping is unique to bankruptcy cases. Lien stripping is not available in Chapter 7 cases which are used in discharging unsecured debts because liens ride through Chapter 7 cases untouched.

However, there are limitations as to what the debtor can do in valuing claims on the primary residence and vehicles financed within 910 days. Congress in its wisdom has prohibited individuals from modifying loans on their primary residence.

If the debtors have one mortgage on their home, they cannot reduce the loan to the value of the house. However, the debtor is allowed to strip away a second mortgage that is not secured by the value of the house. For example, if the debtor has a first mortgage of $300,000 and a second mortgage of $100,000 and the house has a value of $250,000, then the debtor is allowed to strip away the second mortgage.

In Chapter 13 cases, Congress applied another limitation to stripping liens on vehicles financed within 910 days of filing bankruptcy. A vehicle that has been financed longer than 910 days can have its lien reduced to the value of the collateral which allows the debtor to make reduced payments based on the current value of the vehicle and not the outstanding balance of the loan.

The interest rate can also be reduced to the current market rate and the debtor is not required to pay the contract rate.

Joseph E Seagle, PA offers debt relief services to clients in the Central Florida area.
http://www.filemybankruptcynow.com

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Stripping a Second Mortgage From Your Home in Chapter 13 Bankruptcy

A 2nd Mortgage Loan - Potential Benefits

A 2nd Mortgage Loan - Potential Benefits
By Rob Small

Taking out a 2nd mortgage loan is a fast and effective way to free up extra cash, possibly for home improvements, a new car, a much needed holiday or almost any other purpose.

When looking for a 2nd mortgage loan, it is important that you get the right advice. Go to a lender or broker whose advisors will give you unbiased guidance and will fully understand your needs.

They will then be able to find a second loan that meets all your requirements, while keeping interest rates and charges low.

There are many advantages of going to a broker to find your remortgage loan. They will be able to search quickly through hundreds of loans to find the right one for you. This really takes the hassle out of hunting for a low-cost mortgage.

It also means that you get a bargain from a lender whom you might not have considered if you had been carrying out a manual mortgage search.

Whether you are looking for a mortgage to move house, or want a 2nd mortgage loan to fund other projects, finding the right lender can save you thousands of pounds. If you find your second loan through a broker, you could benefit from:

o Acceptance of employed and self-employed borrowers.
o Self-certification allowed.
o Fast decisions and pay-outs.
o Low fixed rates.

Brokers will be able to find mortgage deals for all circumstances, even if you have adverse credit, CCJs or have defaulted on loans in the past.

Another reason to choose a broker when looking for a second loan is the support you will receive.

Mortgage applications can be highly complex, and a broker can assist you during the application process. This can involve explaining any fees or charges, such as Early Repayment Charges.

The ERC is a charge imposed by a lender if you redeem your mortgage within a set number of years. Many loans that have low introductory rates include Early Repayment Charges.

Working with a broker means you will be guided through any charges, so you will be able to find the second loan that meets all your requirements and fits your budget.

Gordon Parkes has written many articles about remortgaging and other secured loans. Find out more about the benefits of taking out a 2nd mortgage loan.

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A 2nd Mortgage Loan - Potential Benefits

The Dirty Little Secret About 2nd Mortgages

The Dirty Little Secret About 2nd Mortgages
By Andy Faria

The dirty little secret that the servicers of second mortgages and equity loans don't want you to know is that the borrower holds most of the leverage when they fall behind on the monthly payments. These type of loans always fall into place behind the first mortgage.

This means that should the home be lost to foreclosure or sold through short sale, the second mortgage won't get a dime until the first mortgage is satisfied in full. With the recent and sudden drop in real estate values nationwide, this means that most of the time, a second mortgage is wiped out or sold off as a total loss in cases of foreclosure or short sale.

Many people will contact their second mortgage when they initially fall behind on payments are shocked to find that the lender will offer a loan modification very quickly and easily. These modifications will generally lower the payments for a period of time to allow the borrower to "get back on their feet".

In reality, these plans are usually far from the best they can offer and many times don't provide any kind of long term relief. Most people accept these plans gratefully and begin making payments again not realizing that they just settled for less than they need to and did not successfully capitalize on their position of leverage.

A second mortgage does have the ability to foreclose on a property if the payments go beyond ninety days behind. This "right to foreclose" was written into the original loan documents; however the only reason they would ever foreclose is if the property has a sizable amount of equity and the foreclosure would make financial sense.

It would need to give them the ability to not only clear the first, but retain a profit for themselves. In fact if the second mortgage foreclosed they would be doing a huge favor for the first mortgage.

The second would now own the property and have to keep everything current, the property taxes (plus any back taxes), the heat (so the pipes don't freeze), repairs, and they would also shoulder the costs of selling the property and paying off the first.

These expenses many times add up to more than they are owed in total on the second mortgage or equity loan. This is why the borrower has much more leverage with a second than with the first. If the value no longer remains in the home, what is protecting the second? Nothing, collection is basically no more enforceable than a credit card debt.

The trend over the past 12-18 months has been that the lender of a second mortgage will only hold a loan until it goes to about six months behind. They have been treating these debts as a "charge off" at that point.

This means that the lender has declared the debt as uncollectable and the debt is no longer considered an asset within the bank. The debt is usually sold off to a debt buyer for a fraction of what the principle balance is.

If a second mortgage is "charged off" the debt is no longer attached to the property in most cases and the new debt buyer will not have the right to foreclose anymore. They still have the right to try to collect the balance and the debt will still appear on the borrowers credit report until it is either "satisfied in full" or "settled" for less than the full balance.

Settlements on a second mortgage or equity loan can go as low as 10% and offer the borrower the opportunity to save a huge amount of money when compared to the cost of remaining in the loan and paying month to month until the debt is paid under the lenders terms.

If a borrower is having trouble keeping up with payments on a second mortgage or equity loan they should certainly look at all options to modify the loan and save money. Many people are faced with the harsh reality that their home is worth more than they owe.

Modifying or settling their second mortgage may very well be the best opportunity to reduce the principle balance owed and get the property "back above water".

The author has been on the front lines of the "economic crisis" since the beginning and continues to fight for consumers nationwide.

Northeast Settlement Group Inc 866-794-1869 Toll Free

Recent Bank of America Success Stories

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The Dirty Little Secret About 2nd Mortgages

Understanding Second Mortgages

Understanding Second Mortgages
By Rachelle Vasser

If you have debt you need to consolidate or you want to reduce the initial investment required to finance your first mortgage, you should consider second mortgages. But second mortgages often come with consequences, so do not be frivolous with them. Learn what they are and how they work before you seek one.

What Is A Second Mortgage?

A second mortgage is literally what it its label implies; it is an additional loan you take to supplement the first loan. This can be used in any kind of property, be it an auto loan, financing for a boat or a home mortgage. Generally I deal with second loans having to do with homes, so that will be the focus of this article.

Often, people don't even realize they can obtain a 2nd mortgage. In fact, it isn't uncommon in real estate for a property to have multiple loans handling its expense.

It Isn't An Out From Responsibility

One misnomer, however, is that such loan can be obtained to save your butt on your first loan. This just is not the case. If you are struggling to keep up with your first mortgage, do not expect your lender to give you a second mortgage.

Banks and lenders are in the business of making money. Especially in the current economic climate and in the aftermath of the sub-prime lending crisis, lenders are not interested in giving loans to people who can't pay off their current debt.

However, if you can show that you have been responsible with your first loan, obtaining that 2nd loan may be an excellent way to consolidate your debt or finance some nice upgrades to your property.

2nd Mortgages Carry High Interest Rates

One thing to keep in mind, however, is that these additional loans are considered to be subordinate to the primary loan. So if you should default on your home financing, any kind of foreclosure would go towards paying off the first mortgage before the 2nd mortgage.

This makes secondary mortgages more risky for lenders. Thus you can expect to pay a significantly higher interest rate for second loans even if you have good credit. Because of that higher interest rate, it also makes them a little more risky for you because you will have a higher monthly payment earning you less equity per dollar paid.

So while I advise you to not ignore second mortgages, be sure you understand what you're getting into before you commit to the additional investment and higher interest rate.

Learn how second mortgages help you obtain 0 down home loans at my comprehensive new website where I dispel the myth of the no money down home mortgage.

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Understanding Second Mortgages