Wednesday, September 23rd, 2009

Second Mortgages

September 17, 2009 by  
Filed under Home Lenders

A home is a really huge investment so if you get a mortgage, that means that you are paying off for your home for any number of years. Usually this can be 20 to 30 years and this is not laughing matter. So what happens when you need money to pay for other things? The good thing is that you can get second mortgages so that you can get enough cash to pay off for other items which can include your children’s college tuition, credit debt consolidation, or even making house repairs or improvements. Now, this can have both advantages and disadvantages so it is important that you know what you are getting into when you are getting another mortgage. Here are some steps that you should go through when you are getting one.

    1. Purpose – You need to know why you need another mortgage. Do you really have a debt that you can’t take care of some other way? Do you really need to make those house repairs? Or do you want to increase the value of your home by doing improvements to it? The question is not about how you can get the loan; that’s the easy part. What is important is that you need to know why you need the loan.
    2. Know your limits – Do you think that you can handle a second loan? This is a really big investment that you will be making so make sure that you make the calculations first before stepping into the responsibility of making payments. You can use an online mortgage calculator to help you out. Find out if you can afford it before jumping in.
    3. Appraisal – Your next mortgage will just be like your first in the sense that you need to get an appraisal. This time the appraisal will be on your own home. Lenders will need to know your homes market value so that they can work out how much they can lend you.
    4. Closing costs – Put simply, get answers about closing costs with your lenders. There may be other fees as well so make sure to get information on that.
    5. Insurance – A second mortgage might mean that you will get a PMI, or what is known as private mortgage insurance. This is typical but sometimes you might not even be required to get it. It’s to help protect the lender from your potential non-payment.
    6. Get opinions – Your lender might have other options like refinancing your home. Make sure you get to know your other options first before getting yourself into deeper debt.

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