Are you planning for a second mortgage? Are you looking for the lowest mortgage interest rate current? If you are, in that case, you have a good chance of getting one; as long as you prove yourself to be eligible for it. What exactly is the second mortgage? It is any sort of loan which has been secured by the value of your existing home. The loan which you had acquired for your first home is known as the primary mortgage, and the loan which you have applied for based on the value of your first home is known as a second mortgage. It is true that at times getting hold of a second mortgage can be quite difficult; however, it is not impossible.
What are the different types of Second Mortgages?
There are primarily three different types of second mortgages. They are as follows
- Home equity loan: This is a type of loan, where you can get hold of a lump sum amount of money for buying a home.
- Home equity lines of credit: Also known as HELOCs, this is a type of loan which can be drawn when you need it.
- Piggyback loans: In this type of a loan, the purchase value of the home is split into two separate loans. It is a very cost-effective measure.
Are you eligible for a second mortgage?
This is one of the crucial questions that need to be answered before you apply for a second mortgage. As mentioned, it can be quite difficult to get hold of a second mortgage loan for a home. Particularly when you have your first mortgage running. The lenders find it difficult to figure out whether you are in a financially strong position to repay bought the loans in tandem. Therefore, you need to convince them that you are financially steady enough and can repay the second mortgage loan when the first one is running. You need to ensure the followings
- It is absolutely essential for you to ensure that you have an excellent credit score.
- In the case of a second mortgage loan, simply presenting your proof of salary or income is not sufficient. In this case, what matters most is how steady your income is.
- Lesser monthly debts you have, more are the chances for you to get hold of a second mortgage loan.
Planning to go for one? Approach the agency from whom you have taken the first loan. Besides, you have multiple different options to choose from these days.