Has anyone ever taken out a second mortgage?
in the big biz asked:
I am interested in taking out a second mortgage. I don’t really want it for thirty years . Can I get it for 30 anyways and pay it off early without penalties. I only need like 35000.
Crystal
I am interested in taking out a second mortgage. I don’t really want it for thirty years . Can I get it for 30 anyways and pay it off early without penalties. I only need like 35000.
Crystal
Tags: Second Mortgage, Thirty Years
August 1st, 2009 at 6:23 pm
Tara
I have never known anyone to get a second mortgage for 30 years. 2nd mortgages are usually shorter term loans, that you pay off faster and your payment amounts are higher.
August 2nd, 2009 at 8:40 am
Christopher
Check out a home equity line of credit (HELOC).
August 5th, 2009 at 4:24 am
Kelly
Have you looked into Home Equity loan instead?
August 7th, 2009 at 9:47 pm
Zachary
Interest rates on second mortgages are higher also.
August 9th, 2009 at 6:05 am
Carol
You will have to check with the lender. Some mortgages have what is called a pre-payment penalty. I have one on my house that lasted for 3 years. After three years there were none. It just really depends on the mortgage and the lender.
August 9th, 2009 at 7:43 pm
Tom
When you apply for the 2nd mortgage make sure you tell your loan officer you want a loan without a pre-payment penalty, this way you can pay it off eerily.
August 11th, 2009 at 4:52 pm
Veronica
I took out a second mortgage to get some new windows in my last house. I had some equity built up in it, so it wasn’t difficult to qualify. Based on the small size of the loan (about 10K, I only financed it for 6 years.) I asked at the time and they said there would be no penalty for paying it off early. Ask to be sure. And when paying extra payments, but sure to specify it go towards payment of the principle, not the interest.
August 14th, 2009 at 7:52 pm
Rodney
Yes you can finance it for 30 years and pay if off early.Just be sure when you go in to pay tell them you are paying extra on the principle.If you are doing this to consolidate bills don’t.You will end up making more bills.Shop around for the best interest rates.You won’t be able to borrow all your equity value only a percentage of it.You will also have to pay closing cost and an appraiser
August 16th, 2009 at 5:48 am
Gordon
When you prepare to sign the paperwork, ensure that you don’t have have an penalty for early payoff. If you do have a pre-pay penalty, check the timeline. That will usually expire after a couple of years . . . usually right about the time that the adjustable interest rate kicks in if that is a part of your contract.
You might want to consider a home equity line of credit instead.
August 16th, 2009 at 9:17 pm
Derek
I have taken out a second mortgage. I don’t reccomend it. It is much more feasable to refinance your first mortgage than take a second. However, if you are going to do this, you can shop around for terms. You can take a loan for fifteen years, which could lower your interest rate and have you pay it off earlier, but it would increase the monthly payment by a lot. I would take one out for the thirty years, make sure there is not a pre-payment penalty though. Any loan with a pre-payment penalty is not a good mortgage. For anybody. Usually those with not so great credit get stuck with pre-payment penelties. This would require the borrower to pay a large sum of interest if it were paid before a certain period is up. Some also include a clause which does not allow the borrower to make extra principle payments each month. Which is an absolute killer for me when evaluating a loan.
Are you aware that if you paid only an extra fifty dollars a month with your payments you knock off several years and thousands of dollars in interest over the life of a loan? This is why many companies try to inforce a pre-payment clause. Never go with a company who wants to put that on there. If they tell you none will be there, and you get to signing the papers and find that clause there, get up and walk out. Do not sign papers when something you were told is not accurate. They are attempting to get you over a barrel and often when you finally get to the paper signing they know most will just sign any way as they are tired of the loan process and do not want to start all over again. The thing is you don’t usually have to. You tell them to change it or you will go to somebody else. Even if you sign it you have 48 hours to recend on it. You go back to the tittle company and they will show you what to do.
I highly reccomend refinancing your first mortgage, get a good interest rate, no pre-payment penalties, and then pay as much extra you can each month. You would be amazed at how much you can save and how much earlier you can pay off your mortgage doing this. The lenders don’t want you to know about this, as it loses them interest fees. Now, if you need to write off interest over the entire life of the loan due to a very high earned income, don’t do the pre-payments. If you are young and expect to make a lot durring the life of the loan it just may be more feasable to pay the interest and write it off on your Federal taxes each year. This is especially true after your kids are grown and you no longer have them as dependants to take deductions and receive the child credit.
The bottom line is to look at your cercumstances today, and look as best you can into the future. While we never know for sure what will occure in the future, we can make plans based on our current health, current income, and future earning power. Then just make the best decision you can. I reccomend not every messing with your house mortgage. More individuals lose their homes this way than any other way. As housing costs increase, and property appreciates, you will soon be making payments on your home that are less than what others pay in rent. Your home is your number one best investment. When paid off it is a great sourse of retirement income. Without having to pay a mortgage payment or rent, your retirement income can go towards other expenses. Without a huge mortgage when you are in your sixties, what ever pension or retirement you have is that much more valualble.
If possible, get by without taking out loans. As I said this is your best investment and many lose their homes by doing this. Good luck in what you decide you need to do. I wish you the best.
August 19th, 2009 at 9:41 am
Curtis
There are options: With all of them, you will be paying closing costs and an inspection (if you roll them into the loan, you’re still paying for them).
A Home Equity Loan (or HEL, also know as a 2nd mortgage) will allow you to borrow on the equity you’ve built up, either from paying on the 1st mortgage or increses in the homes value (or both). Generally, you can’t borrow more than 80% of the homes current value between ALL the mortgages (1st+2nd+3rd…