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Second Mortgages

A second mortgage can be used to reduce your monthly debt payments, make home improvements or free up cash for whatever you want. You can also use a second mortgage to help you purchase a new home for up to 100% of its appraised value.

Like a home equity loan or others of its type, the lender requires it to be secured by a second mortgage lien.

Because the lender is at a higher risk in case of default (since they will not receive any money from the sale of the house until the first lender is paid, and if there is no money left over, loses their money), the interest rates are higher.

You can also use a second mortgage for consolidating credit card debts by reducing your rates and payments and converting compound interest into simple interest. Since the repayment amount is higher than the initial mortgage, it is better to use these funds for heavier expenses.

Many people wonder about getting a second mortgage (it is also sometimes referred to as a home equity loan) for their property, but have no idea of how the go about this. There are a number of steps the homeowner or property owner should follow. The more of the items listed below that you can complete the better your chances of getting a second mortgage loan.

Below are some tips and suggestions to help you prepare for your second mortgage application; although as with most people you probably have already completed many items on the list.

  • Get a good idea of the present value of your property, you can ask some local real estate agents to come and view your home. These estimates should be free of charge; you will need 2 or 3 estimates. This information will give you a price range for your home.
  • Get all the papers related to you any present mortgages or liens that may be on the property. If you have any credit card debt you can also use the money to pay off these.
  • Estimate your loan to value ratio (LTV) by dividing the current balance owing on your mortgage by the estimated value of the property either from an appraiser (cost involved) or a real estate agents appraisal (usually free). A low (loan to value ratio) LTV means that you should be able to get a second mortgage fairly quickly, higher ratio LTV’s can be arrange but they do take longer.
  • Find out what your credit rating is by going to Equifax or Transunion for your free credit report. A good credit score will make it easier to arrange funding and at lower interest rates. A bad credit score may result in a longer time period to find funding.
  • An appraisal is usually required and a property that looks messy in the appraisal pictures will have a harder time getting the funding. Therefore clean up the house and outside areas, make your home look nice and clean. Fix and paint any damaged wall areas, remove non-essential items on the floor.
  • For more information contact The Wilson Team (below) to find out how we can get the home loan financing that you are looking for.
  • A private lender may wish to come by and inspect the property before they commit to financing a loan.
    Now you have the basic information that will be required. You now can determine how creditworthy you are. A low LTV and a high credit rating means that you should be able to get financing under terms that are favorable to you. A high LTV ratio and a low credit score rating means that you are a higher risk and the interest rates may be higher.

For more information contact The Wilson Team or call 1-855-695-9250

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