Second Mortgages: Basics, Pros, and Cons, 2nd mortgage.#2nd #mortgage


Second Mortgages – Advantages and Disadvantages

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A second mortgage is a loan that lets you borrow against the value of your home. Your home is an asset, and over time, that asset can gain value. Second mortgages, also known as home equity lines of credit (HELOCs) are a way to put that asset towards other projects and goals.

What is a Second Mortgage?

A second mortgage is a loan that uses your home as collateral – similar to a loan you might have used to purchase your home.

The loan is known as a “second” mortgage because your purchase loan is often the first loan that is secured by a lien on your home.

Second mortgages tap into the equity in your home, which you might have built up with monthly payments or through market value increases.

Loans can come in several different forms.

Lump sum: a standard second mortgage is a one-time loan that provides a lump sum of money you can use for whatever you want. With that type of loan, you’ll repay the loan gradually over time, often with fixed monthly payments. With each payment, you pay a portion of the interest costs and a portion of your loan balance (this process is called amortization).

Line of credit: it’s also possible to borrow using a line of credit, or a pool of money that you can draw from. With that type of loan, you don’t ever have to take any money – but you have the option to do so if you want to. You’ll get a maximum borrowing limit, and you can continue borrowing (multiple times) until you reach that maximum limit.

Like a credit card, you can even repay and then borrow again.

Rate choices: depending on the type of loan you use (and your preferences), your loan might come with a fixed interest rate that helps you plan your payments for years to come. Variable rate loans are also available and are the norm for lines of credit.

Advantages of Second Mortgages

Loan amount: second mortgages allow you to borrow a large amount. Because the loan is secured against your home (which is generally worth a lot of money), you have access to more than you could get without using your home as collateral. How much can you borrow? It depends on your lender, but you might expect to borrow (counting all of your loans – first and second mortgages) up to 80% of your home’s value.

Interest rates: second mortgages often have lower interest rates than other types of debt. Again, securing the loan with your home helps you because it reduces the risk for your lender. Unlike unsecured personal loans like credit cards, second mortgage interest rates are commonly in the single digits.

Tax benefits: in some cases, you’ll get a deduction for interest paid on a second mortgage. There are numerous technicalities to be aware of, so ask your tax preparer before you start taking deductions. For more information, learn about the mortgage interest deduction.

Disadvantages of Second Mortgages

Of course, life is full of tradeoffs. Be aware of the pitfalls of using a second mortgage. The costs and risks mean that these loans should be used wisely.

Risk of foreclosure: one of the biggest problems with a second mortgage is that you have to put your home on the line.

If you stop making payments, your lender will be able to take your home through foreclosure, which can cause serious problems for you and your family. For that reason, it rarely makes sense to use a second mortgage for “current consumption” costs such as entertainment and regular living expenses – it’s just not sustainable or worth the risk.

Cost: second mortgages, like your purchase loan, can be expensive. You’ll need to pay numerous costs for things like credit checks, appraisals, origination fees, and more. Even if you’re promised a “no closing cost” loan, you’re still paying – you just won’t see those costs transparently.

Interest costs: any time you borrow, you’re paying interest. Second mortgage rates are typically lower than credit card interest rates, but they’re often slightly higher than your first loan’s rate.

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Second mortgage lenders take more risk than the lender who made your first loan. If you stop making payments, the second mortgage lender won’t get paid unless and until the first lender gets all of their money back.

Common Uses of Second Mortgages

Choose wisely how you use funds from your loan. It’s best to put that money towards something that will improve your net worth (or your home’s value) in the future – because you need to repay that loan.

  • Home improvements are a common choice because the assumption is that you’ll repay the loan when you sell your home with a higher sales price
  • Avoiding private mortgage insurance (PMI) might be possible with a combination of loans – just make sure it makes sense compared to paying – and then canceling – PMI
  • Debt consolidation: you can often get a lower rate, but you might be switching from unsecured loans to a loan that could cost you your house
  • Education: as with other situations, you’re creating a situation where you could face foreclosure. See if standard student loans are a better option

Tips for Getting a Second Mortgage

Shop around and get quotes from at least three different sources. Be sure to include the following in your search:

Get prepared for the process by getting money into the right places and getting your documents ready. This will make the process much easier and less stressful.

Beware of dangerous loan features. Most conventional loans do not have these problems, but it’s worth keeping an eye out for them:


Second Mortgage Rates ~ Refinance With a Low Interest 2nd Mortgage, 2nd mortgage.#2nd #mortgage


Second Mortgage Home Loans – Lenders Rate Information

A second mortgage is an additional loan that can be acquired after the first. The same assets that were used to secure the first, must be used to secure the second. Generally, the interest rate on a second mortgage is higher than that of a first. Equity determines the quantity and type of second mortgage an individual qualifies for.

Obtaining Financing

Obtaining a second mortgage requires the same process as obtaining a first mortgage. Lenders will require all the same paperwork, as well as a new appraisal of the individual’s assets. The new lender will require personal information, including asset values, in order to determine whether or not to offer a loan.

Second Mortgage Rates

There are two types of second mortgages: fixed and variable rate. The interest on a fixed rate loan will remain the same throughout the life of the loan. Fixed rate loans usually last longer than variable rate loans, about 15 to 30 years. The variable or adjustable rate mortgages (ARMs) have interest rates that can be periodically changed by the lender. Adjustable rates generally have shorter terms, lasting between one and 20 years, with periodic rate resets.

Individuals who are considering a variable rate mortgage need to take a number of factors into consideration before making their decision. It is important to discuss the following topics with the mortgage company:

  1. When the interest rate can change
  2. How frequently the rate can change
  3. How high the rate can rise
  4. What the rate change is based on

It is important to get specific information regarding each of these factors. Second mortgages should never be signed without all of the above information. It is best to get the information in writing, this prevents lenders misleading or misconstruing information.

The mortgage company should also be able to explain how their rates are determined and what may cause them to increase throughout the life of the loan. It is important to ensure that interest rate changes are determined on a specific set of criteria. This information should also be obtained in writing.

Either type of mortgage rate will result in a loan that is comparable or slightly more expensive than first mortgages. The second mortgage may be slightly more expensive because the lender understands that the first loan was already foreclosed on. This means that the second lender is absorbing more risk and may be warier of offering a mortgage.

2nd mortgageCompare your options: calculate PMI vs a second mortgage. 2nd mortgage

Term Lengths

Second mortgages usually have terms of one to 30 years. Shorter terms will have higher payments and longer terms will have lower payments. It is important to calculate exactly how much can be afforded each month. This is best determined by assessing how much personal income can be allotted to the loan each month. This number, in combination with the interest rate, should be used to determine the length of loan that is affordable.

Generally, adjustable rate loans have more flexible terms than fixed rate loans. The fixed loans may be offered only in 15 and 30 year terms, while variable rate loans may be offered in any number of years between one and 20. The lender will help determine which option is ideal taking income levels and loan amounts into consideration.

Where to Find a Second Mortgage

There are virtually unlimited numbers of lenders who supply second mortgages. It is important that individuals compare the costs associated with a number of potential lenders. For most people, lenders who offer the lowest interest rates are the best choice as their second mortgage supplier. Although, there are a few other factors that can be taken into consideration.

It is possible to save money by obtaining a second mortgage with your existing mortgage lender. They may wave fees associated with paperwork or other procedural requirements. This is not true of all mortgage lenders. It is best to call the mortgage company and request farther information about their second mortgage procedures before assuming the costs will be reduced.

Another place to look for a second mortgage is through banks which individuals are already involved in. The paperwork and procedures which are required to obtain second mortgages can be easier through banks that individual’s already have ties to.

The Best Time to Obtain Financing

Due to the economic downturn, the interest rates on first and second mortgages are currently at an all time loan. This year may be a good time to obtain a second mortgage. It is important, however, to take all financial factors into consideration before attempting to obtain a second mortgage.

It is best to follow the market trends before obtaining a second loan. Mortgage rates can be variable, but tracking the market trends can help individuals obtain second mortgages during times of low interest rates. It’s important to keep an eye out for what lenders are charging and those which seem to be offering the lowest rates. These observations will help individuals determine the best mortgage companies and the times in which these companies offer the lowest interest rates.

It is important to note that variable rate mortgages may change according to economic changes. It is important to fully understand what factors contribute to the changes in interest rate. If economic conditions can effect the variable rate loans, obtaining one during an economic downturn may not necessarily result in lower interest rates in the long run.

Factors that can effect the interest rate of a second mortgage include the demand for loans and national economic conditions. In periods of economic downturn, second mortgage rates fall low and can be obtained more readily. Individuals can take advantage of this by building up a money supply during economic upturns and obtaining second mortgages during downturns.

It is best to obtain a second mortgage when personal finances allow it. If a second mortgage would be difficult to afford, it may be best to wait. Individuals should be able to cover the cost of the first and second mortgage, as well as all other monthly payments, before obtaining a second loan.

Benefits of a Second Mortgage

Second mortgages are beneficial to individuals who need a significant amount of money and have no other means of obtaining it. Individuals who will benefit the most from second mortgages are those who are financially stable, but cannot use credit cards or bank accounts to obtain the money they desire.

Sometimes second mortgages are necessary for those who are not financially stable, but have no other means of obtaining money. This is not the ideal situation to obtain a second mortgage because there is significant risk of the individual being incapable of paying back the loan. Sometimes, however, it cannot be avoided.

There are a number of situations where a second mortgage may be beneficial. These include:

  1. Bypassing property mortgage insurance (PMI) requirements
  2. Debt consolidation
  3. Home Improvements
  4. Purchasing a new home
  5. Creating home equity

Hidden Costs

In addition to the interest rate, there are a number of costs associated with second mortgages, these include:

The cost of these fees will be similar to those associated with first mortgages. The most important hidden cost to consider is the lending fees.

Lending fees are calculated on a points based system. One point is equal to one percent of the loan amount. The cost of lending fees varies widely between mortgage companies. It is important to meet with a number of lenders in order to find the lowest lending fees.

Individuals who are obtaining a second mortgage should request written documentation of the lending fees. Some areas have state mandated caps on lending fees, but others do not. The state banking commissioner can provide information on lending fee limits.

It is important that the lending fee is understood and agreed upon before signing for the second mortgage. Individuals should ask to see the fee in writing and should compare it to any state limitations to ensure that the lender is following mortgage regulations.

Associated Risks

2nd mortgage

The largest risk associated with a second mortgage is failure to pay the monthly interest rates. It is possible for an individual to lose their home if they are incapable of paying for the second mortgage. This is why it is so important to obtain affordable, low interest rates and lending terms that allow for small monthly payments. Market research, and comparison shopping should help individuals avoid the risk of losing their home.

Another risk of obtaining a second mortgage is higher interest fees. There are generally only small differences between the interest fees of first and second mortgages, but sometimes even a small increase in the interest rate can result in financial ruin. Individuals should calculate exactly how much the second mortgage will cost per month to avoid any surprises.

The various fees associated with a second mortgage is another risk. These fees can add up quickly and for those already in financial ruin, these costs could be a lot to handle.


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Recognized as a source of private Ontario mortgage money, Tridac Mortgage specializes in working with borrowers turned down by banks and traditional lending institutions. Our focus is not just to arrange a private mortgage for you but ensure that you are set up to successfully move forward financially with more conventional financing and lower rates.

Here are some of the issues that help our clients with everyday:

  • second mortgages
  • debt consolidation
  • property income tax arrears
  • stopping power of sale
  • mortgage arrears
  • restructure of financing
  • judicial sales / tax sales
  • unique “non-conforming” properties
  • major home renovations construction financing

Why Consider Tridac Mortgage For Your Private Mortgage?

Tridac Mortgage is the exclusive brokerage for a number of private money sources including Hansa Mortgage Investment Corporation. With unique access to our own pool of private mortgage money, each lending decision is based on more than numbers, ratios, credit score, and income. While important, we also take into consideration your capacity, character, ability, and your desire to get your finances on track.

For over 40 years we have encountered almost every conceivable financing situation and understand that the circumstances and situations of individuals are unique.

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Private mortgage lenders with purpose.

Since we are entrusted with our investor s money we are able to tailor a more personalized private mortgage solution to you. This helps us build a strong relationship with you, keeps communication clear and results lower over all costs a fees.

Our focus is on short term transitional lending where we can improve your situation and move you into conventional and lower interest rate financing.

What is a private mortgage?

A private mortgage is a mortgage contract in which the lender is not a registered financial institution. Instead, the lender may be an individual or group of individuals who provide money in exchange for secured interest on your real estate.

Banks have strict guidelines surrounding their lending practices limiting their ability to lend for certain scenarios or borrower profiles. With borrowers marginalized as a result of these strict lending guidelines, private mortgages are used to meet those unique needs. Situations where a borrower may require a private mortgage include financing for:

  • home renovation and construction projects
  • self-employed borrowers who can t support their income via traditional means
  • debt consolidation to help improve cash-flow and improve credit scores
  • iincome or property tax arrears which block you from being able to arrange more conventional financing
  • mortgage arrears;
  • non-conforming properties

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Second Mortgage Rates ~ Refinance With a Low Interest 2nd Mortgage, 2nd mortgage.#2nd #mortgage


Second Mortgage Home Loans – Lenders Rate Information

A second mortgage is an additional loan that can be acquired after the first. The same assets that were used to secure the first, must be used to secure the second. Generally, the interest rate on a second mortgage is higher than that of a first. Equity determines the quantity and type of second mortgage an individual qualifies for.

Obtaining Financing

Obtaining a second mortgage requires the same process as obtaining a first mortgage. Lenders will require all the same paperwork, as well as a new appraisal of the individual’s assets. The new lender will require personal information, including asset values, in order to determine whether or not to offer a loan.

Second Mortgage Rates

There are two types of second mortgages: fixed and variable rate. The interest on a fixed rate loan will remain the same throughout the life of the loan. Fixed rate loans usually last longer than variable rate loans, about 15 to 30 years. The variable or adjustable rate mortgages (ARMs) have interest rates that can be periodically changed by the lender. Adjustable rates generally have shorter terms, lasting between one and 20 years, with periodic rate resets.

Individuals who are considering a variable rate mortgage need to take a number of factors into consideration before making their decision. It is important to discuss the following topics with the mortgage company:

  1. When the interest rate can change
  2. How frequently the rate can change
  3. How high the rate can rise
  4. What the rate change is based on

It is important to get specific information regarding each of these factors. Second mortgages should never be signed without all of the above information. It is best to get the information in writing, this prevents lenders misleading or misconstruing information.

The mortgage company should also be able to explain how their rates are determined and what may cause them to increase throughout the life of the loan. It is important to ensure that interest rate changes are determined on a specific set of criteria. This information should also be obtained in writing.

Either type of mortgage rate will result in a loan that is comparable or slightly more expensive than first mortgages. The second mortgage may be slightly more expensive because the lender understands that the first loan was already foreclosed on. This means that the second lender is absorbing more risk and may be warier of offering a mortgage.

2nd mortgageCompare your options: calculate PMI vs a second mortgage. 2nd mortgage

Term Lengths

Second mortgages usually have terms of one to 30 years. Shorter terms will have higher payments and longer terms will have lower payments. It is important to calculate exactly how much can be afforded each month. This is best determined by assessing how much personal income can be allotted to the loan each month. This number, in combination with the interest rate, should be used to determine the length of loan that is affordable.

Generally, adjustable rate loans have more flexible terms than fixed rate loans. The fixed loans may be offered only in 15 and 30 year terms, while variable rate loans may be offered in any number of years between one and 20. The lender will help determine which option is ideal taking income levels and loan amounts into consideration.

Where to Find a Second Mortgage

There are virtually unlimited numbers of lenders who supply second mortgages. It is important that individuals compare the costs associated with a number of potential lenders. For most people, lenders who offer the lowest interest rates are the best choice as their second mortgage supplier. Although, there are a few other factors that can be taken into consideration.

It is possible to save money by obtaining a second mortgage with your existing mortgage lender. They may wave fees associated with paperwork or other procedural requirements. This is not true of all mortgage lenders. It is best to call the mortgage company and request farther information about their second mortgage procedures before assuming the costs will be reduced.

Another place to look for a second mortgage is through banks which individuals are already involved in. The paperwork and procedures which are required to obtain second mortgages can be easier through banks that individual’s already have ties to.

The Best Time to Obtain Financing

Due to the economic downturn, the interest rates on first and second mortgages are currently at an all time loan. This year may be a good time to obtain a second mortgage. It is important, however, to take all financial factors into consideration before attempting to obtain a second mortgage.

It is best to follow the market trends before obtaining a second loan. Mortgage rates can be variable, but tracking the market trends can help individuals obtain second mortgages during times of low interest rates. It’s important to keep an eye out for what lenders are charging and those which seem to be offering the lowest rates. These observations will help individuals determine the best mortgage companies and the times in which these companies offer the lowest interest rates.

It is important to note that variable rate mortgages may change according to economic changes. It is important to fully understand what factors contribute to the changes in interest rate. If economic conditions can effect the variable rate loans, obtaining one during an economic downturn may not necessarily result in lower interest rates in the long run.

Factors that can effect the interest rate of a second mortgage include the demand for loans and national economic conditions. In periods of economic downturn, second mortgage rates fall low and can be obtained more readily. Individuals can take advantage of this by building up a money supply during economic upturns and obtaining second mortgages during downturns.

It is best to obtain a second mortgage when personal finances allow it. If a second mortgage would be difficult to afford, it may be best to wait. Individuals should be able to cover the cost of the first and second mortgage, as well as all other monthly payments, before obtaining a second loan.

Benefits of a Second Mortgage

Second mortgages are beneficial to individuals who need a significant amount of money and have no other means of obtaining it. Individuals who will benefit the most from second mortgages are those who are financially stable, but cannot use credit cards or bank accounts to obtain the money they desire.

Sometimes second mortgages are necessary for those who are not financially stable, but have no other means of obtaining money. This is not the ideal situation to obtain a second mortgage because there is significant risk of the individual being incapable of paying back the loan. Sometimes, however, it cannot be avoided.

There are a number of situations where a second mortgage may be beneficial. These include:

  1. Bypassing property mortgage insurance (PMI) requirements
  2. Debt consolidation
  3. Home Improvements
  4. Purchasing a new home
  5. Creating home equity

Hidden Costs

In addition to the interest rate, there are a number of costs associated with second mortgages, these include:

The cost of these fees will be similar to those associated with first mortgages. The most important hidden cost to consider is the lending fees.

Lending fees are calculated on a points based system. One point is equal to one percent of the loan amount. The cost of lending fees varies widely between mortgage companies. It is important to meet with a number of lenders in order to find the lowest lending fees.

Individuals who are obtaining a second mortgage should request written documentation of the lending fees. Some areas have state mandated caps on lending fees, but others do not. The state banking commissioner can provide information on lending fee limits.

It is important that the lending fee is understood and agreed upon before signing for the second mortgage. Individuals should ask to see the fee in writing and should compare it to any state limitations to ensure that the lender is following mortgage regulations.

Associated Risks

2nd mortgage

The largest risk associated with a second mortgage is failure to pay the monthly interest rates. It is possible for an individual to lose their home if they are incapable of paying for the second mortgage. This is why it is so important to obtain affordable, low interest rates and lending terms that allow for small monthly payments. Market research, and comparison shopping should help individuals avoid the risk of losing their home.

Another risk of obtaining a second mortgage is higher interest fees. There are generally only small differences between the interest fees of first and second mortgages, but sometimes even a small increase in the interest rate can result in financial ruin. Individuals should calculate exactly how much the second mortgage will cost per month to avoid any surprises.

The various fees associated with a second mortgage is another risk. These fees can add up quickly and for those already in financial ruin, these costs could be a lot to handle.


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