Second Mortgage Loans

Second Mortgage Lender in MD, DC, VA

A second mortgage loan is exactly what it sounds like – it’s a second mortgage that you take out on your home. There are a number of reasons why you might want to take out a second mortgage loan. For example, you may need money to consolidate your debts, to finance home improvements or to help cover part of the down payment on your first mortgage loan in order to avoid having to pay property mortgage insurance. The following are a few things that you should keep in mind before considering second mortgage loans.

Second Mortgage Interest Rates

Taking out a second mortgage can be advantageous over taking out other types of loans due to the interest rates, which are fairly low when compared to credit card loans or other types of unsecured loans. The interest is also usually tax-deductible since second mortgage loans are still mortgage loans. However, you do need to realize that the interest rates will typically be higher than the interest rates of your first mortgage loan.

Second Mortgage Loan Terms

The term of a second mortgage loan is pretty flexible. You can pay it off within as little as a year or be given a s much as a 20-year period to pay it back. Just like your original loan, the shorter the loan period is, the higher your monthly mortgage payments will – but the longer the loan period is, the more interest you’ll end up paying.

Additional Costs for Second Mortgages

Second mortgage loans contain the same additional costs that you have to pay when applying for your first mortgage loan. This means that you’ll have to pay for loan origination fees, appraisal fees and closing costs.

The Second Mortgage Loan Process

While the process of applying for a second mortgage loan is practically identical to applying for your first mortgage loan – which means you’ll need to provide the same personal financial information in addition to paying for a new home appraisal – being approved a second time around can be a little more difficult. This is because the lender of your first mortgage will have the first lien on your property if you default on your loan or your property is foreclosed on. This means that the first lender will be paid what they are owed first before the second lender will be paid, which makes providing a second mortgage loan more risky for lenders.

Applying for a second mortgage loan can be very beneficial if you need the money – depending on what you need it for, of course. However, be sure to keep these things in mind before you make the decision to apply for a second loan – and remember that you will be paying two different mortgage payments every month. You need to make sure that you’ll be able to afford this or else you’ll end up defaulting on your loans. For additional information about applying for second mortgage loans or for information on home loans in general, be sure to contact us at Eagle Creek Mortgage today.