The Advantage of Second Mortgage Loans
The second mortgage is usually known as the home equity loan. In the loan market, the home equity loan or the second mortgage has become a new trend. People, who are looking for new opportunities or wants to create their own opportunities for life, consider the home equity loans as very helpful. Well, a great utilization of home equity loans, a well-planned financial plan can bring a lot of advantage, but a careless attempt can do much harm. The advantages of the second mortgage loan are really very much alluring. So, the borrowers often run with the flow. This is where the possibility of getting into a financial problem becomes very acute. That is why, a person who wants to take a second mortgage or a home equity loans, must consider the advantage and disadvantages.
The benefits of taking a second mortgage:
Understanding the benefits of second mortgage first requires the understanding of the concept of second mortgage or the home equity loans. A home equity loan is kind of a loan where you can actually borrow an amount from the lender equivalent to the current price of your house. It is kind of like secured loans, where the home you have becomes the collateral. Also, since the loan amount is decided by the current market price of the home, the equity line of credit is usually big enough to meet any need of the borrower.
Taking a second mortgage can open opportunities to lot of financial options. Some of the benefits are outlined in the description below:
The debt consolidation benefit:
Debt consolidation is one of the benefits obtained from home equity loans. The second mortgage loan amounts are usually secured with the equity of the house. So, it is a big amount if loans obtained by the borrowers. On the other hand, there is no limitation like how can you use the amounts obtained from the loan. So the borrowers can use the loan amount to consolidate all other loans he or she has with the home equity loan. The second mortgage is a low interest debt. So, one can easily consolidate other high interest debts like credit card debts with the second mortgage, and save a huge amount of money.
The advantage in revenue payment:
The advantage of second mortgage can also be extended in considering the tax benefits. When a borrower consolidates his or her debts, then the tax laws allow them to deduct the interest from the remaining loans as well. So, if a borrower is actually using the second mortgage to consolidate his or her other loans, then it will allow them to have a deduction from their interest in the remaining second mortgage as well.
The flexible interest rate facility:
The second mortgage loan often comes with the facility of a low rate of interest. The homeowners also need to calculate the cost they will have to make for taking the second home mortgage. If the investment is less than the long term savings they can make, then the decision of second mortgage is a wise financial decision.
The option of home improvement:
The amount that is obtained is quite big enough for a borrower to use the loan for any purpose. Usually, the purpose of home improvement is kind of purposes where you need huge financial support. The advantage of the second mortgage loans is that it will allow you to fulfill the purpose of home improvement as well along with fulfilling other financial purposes.
Thus, the persons who are looking for a home equity loan, or the second mortgage loan, should consider the options and then decide if they should take out the loan or not.
Different types timeline in mortgage deals for you
Before you go for buying a home, it is very important to decide what kind of mortgage deal would be the best for you. In most cases, this kind of sorting is done based on the financial situation, analyzing the assets of the buyer of the house or the mortgage taker. The financial situation will dictate in deciding the mortgage type where the interest rate and pay off for each installment will match the current situation of the buyer. To understand which mortgage deal is better for you, you need to know about various kinds of mortgage deals available in the market.
There are various kind of mortgage deals available in the market, so that the buyer can chose the best among various types matching with his or her financial situation. Some of the types are described below:
Conventional mortgage loan deals with long life time:
Conventional mortgage deals are mostly fixed rate mortgage deals. If you are going to choose conventional types of mortgage loans, then it is not going to be a matter of hassle for you. These popular loans are obtained very easily. One of the best advantages of this loan is that it comes up with a big life time.
The mortgage deals with 30 year lifespan:
The most common form of life time stands at 30 years. A 30 year lifetime for repaying the loan means that you will be in need to pay a very low amount for loans in a lifetime. 30 years lifetime are available for mortgage loan types like conventional mortgage loans, Jumbo loan deals, VA and FHA mortgage loan deals.
The mortgage deals with 15 year lifespan:
15 years of lifetime for the loans are also a good lifetime and a least expensive option for mortgage deals. Least expensive in the sense that it comes up with less interest rate on the capital. So, for each installment, you will have to pay less for the interest rates and more on the capitals. One thing you need to be careful about choosing this lifetime is that you will have to pay quite a big amount of money for paying such loans every month. You can also get a 15 year life time on conventional mortgage loans, Jumbo loan deals, VA and FHA mortgage loan deals.
The mortgage deals with 40 year lifespan:
In the news, now there is a very new mortgage deal introduced by the mortgage providers. It is the mortgage with 40 years lifetime. No doubt that a 40 year lifetime for a mortgage deals mean that your pay off for every month is going to be the least than any other loan deals. At the least means a very minimal amount of loan repayment every month than any other loans you have. One thing, about which you have to be careful, is that for such loan deals you are going to need to pay a lot for the interest rates than the actual capital amount of loans.
Now, the call is yours to decide what kind of loan deals depending on the life time will be chose by you. Your financial situation will tell you to choose the right type of loan deals based on the timelines. For any problem or confusion, you can take the help of financial experts. You can also take help from the financial experts of Midline Mortgage Corp.
Fixed rate and variable rate mortgage deals
A home is one of the most desired assets for a human. In past, it could take a lifetime for anyone to earn for living and making his or her own fixed living place. Realizing the very desire of human to get a home for living and the value of a home that takes a huge time to make anyone eligible to earn that, home loans were introduced. Now a day, the mortgage deals are very much popular and easy to get for anyone. So, now it is quite obvious that people can pursue their dream of getting a home with the mortgage deals. But, the availability and realizing the dream of getting a home is not the final thing. Mortgage deals are loan deals which mean that you will have to pay for it eventually. The interest rates on mortgage deals are also very important thing to think about. A wise person will definitely take account of all these factors and then choose what the best mortgage deal is for him or her. That is why, now there are several types of mortgage deals available for people through which one can choose the best deal according to his or her present situation.
Today, two of the very popular mortgage deals will be discussed here, which varies according to the interest rate adjacent with a mortgage deal. These two mortgage deals are:
- Fixed mortgage deals
- Variable mortgage deals.
Fixed mortgage deals:
The fixed rate mortgage loans are the kind of home loans where you will have to pay a fixed rate of interest rate for the loan over the lifetime. There are certain advantage and disadvantage to have a fixed interest rate over the mortgage deals. The certain advantage for the fixed mortgage loan is that you will be able to have a low rate of interest for the loans on the capital. No matter you have a less or high earning, you will never be forced to pay a high rate of interest on the loans. The other loan conditions are also flexible for such kind of loans. It is a very popular kind of loan which people are taking for long time. It is very unfortunate and rare as well for anyone to suffer with such kind of loans.
Adjustable of variable interest on mortgage deals:
The adjustable or variable rate of interest on mortgage deals is kind of a new concept in the home loan market. The reason for introducing such a loan deal was the recession. The recession has caused a lot of people to face a lot of ups and downs in their financial life. The loss of jobs or cut down in the regular earning has caused a lot of problem while paying off their mortgage loans. Many had to loss their home, go for bankruptcy. So, the continuous fluctuation made them afraid about going for a home loan that comes up with a fixed rate mortgage. So, the new adjustable mortgage deals come up with adjustable interest rates. When you have a high income, the interest rate will be high according to your income and when you have a low income, the interest rate will become less. The lifetime of the loan also may vary according to the income. The loan is very suitable for the persons who do not have a stable income. At the same time, it has a disadvantage that people have to pay higher rate of interest for these kind of loans than what they pay in a fixed rate mortgage deal.
Pros and cons of balloon mortgage
In today’s market, huge types of mortgage deals are found. Matching with the market demand, the instability of people’s income and people’s tendency from one place to another has invoked the requirement of balloon mortgage deals. A lot of people are taking the benefit of balloon mortgage and some are stuck in a dead end. It is all because of the lack of the understanding about this mortgage deal. Any wise man would think about his or her present financial condition before taking a mortgage deal. Failing to understand these factors can lead to major financial catastrophes. Today, such a tricky mortgage deal will be discussed which in times can be very beneficial, but at the same time can be very harmful for financial life if not applied in a proper condition. This mortgage deal is known as the balloon payment mortgage.
What is a balloon payment mortgage?
A balloon mortgage deal is kind of the deal where a mortgage is not totally amortized after the term of the loan ends. So, after the loan terms are over, the borrower is left with a big balance due at the maturity of the loan. This final payment is called as the balloon payment. The reason, for which it is called as the balloon or bubble payment, is the big amount it holds at the end of the loan. The main advantage of such loan is that during the lifetime of the loan, you pay a very minimal amount, just the interest and minimal loan charges. These payments do not create any impact on your actual capital amount, or a very less amount is reduced from the capital. At the end of the loan, you will have to pay the most of the capital amount of the loan.
Who takes such kind of loans?
Normally the balloon payment mortgage is taken by the commercial purpose. The commercial business owners move from one place to another frequently, than that of the residential mortgage takers. At the same time, a regular cash flow in business does not create much impact when there is an event to pay a big balloon payment at the end when the loan is matured. Also, people who might need a home now, but the income condition is running through a down time takes such loans as well. The calculations for such people goes right if their income increases after some time and it makes them eligible to pay the big amount of capital at the end of the loan.
What are the kinds of interest charged for balloon mortgage deals?
Balloon mortgage deals can hold both of the type of interest rates. It can come up with a fixed rate of interest where the loan will have the same kind of interest rate from beginning to the end, or a floating kind of interest rate where the interest rate will vary or adjust according to the income or eligibility of paying of the borrower.
What can you do if you do not be able to pay the balloon payment?
If your calculations fail to prove you right at the end of the loan term, when you have to make a big payment at the maturity, then you have the option to take a refinance or second mortgage loan. Thus your loan conditions will be set and you can continue your mortgage loans on more safe way.
The Right Time for House Hunters
The heading may sound like it is an article dedicated on how you would obtain a house successfully, which is obvious. But, have you ever marked, obtaining a house successfully also mean that how successfully you can obtain a house loan? Yes, it is true. If you are thinking about what are the good times when you should head to the real estate market to look for the right house for yourself, you should also think about what are the right times, when you should look for a real estate lender and obtain mortgages in easy conditions.
Right after the federal government passes any act for home buyers:
The recessions have been going on for so long. A lot of people have gone through reduce in earning, loss of jobs and home as well. This condition has made the government worried. To save the thousands victims of recessions, the government have passed some acts for new types of home loans. When the government passes such new types of acts, they also provide some stimulant money towards the money lenders, so that they can keep their home loan lending business on going. These are the times, when the home loan lenders provide loans easily and on easy conditions. If you are one of the house hunters who is looking for a home and an easy home loan as well, then these are the right times for you to take a look at the market and find out what is the deal for you in there.
A downtime in the real estate market:
There are sometimes when the house hunters are in the rush for looking at homes. In most cases, it is in summer, when most of the people want to move from their house. In summer, most people have vacations. Their children are out of the school. So it is easy for them to move from one house to anew in such times. People who do 9-5 jobs, find it almost impossible to move from their house in other times of the year. So, it is obvious that the real estate market goes through a boom in such times with great demands of new house from a huge amount of people. If you follow the market on such time, you will find all the curves of graphs are at peak. People, who want to obtain a house in less price and easy conditions, will not move to look for a new house at such times. Rather, they would consider the time after these boom time. After such a boom time, suddenly all the curves go down, the number of home buyers move from huge amount to a few. Real estate brokers, real estate lenders; all have to endure loss at such times. This is the time when anyone who walks in the real estate market can cut the deals in very easy conditions.
So, people who wants to look for easy conditions in house loans, should not only be concerned about the negotiation they can put up with mortgage lenders, but also they should be concerned about the time they have planned to put the negotiation with the mortgage lenders.
Ways to Obtain a Loan Modification on Mortgage?
The mortgage or house loans are long term loans. In most cases the life time of a home loan is 30 years, but it varies from minimum 10 years to maximum 40 years. Carrying a loan for such a long time, have some benefits. For example: the borrower does not have to pay a huge amount of money for paying the installments. Also, in most cases the actual price of the house gets increased in the market, by the time the loan gets totally paid. Also, there are some disadvantages as well. No one can actually determine that his or her financial life will be in the same condition for 30 or 40 years. Even it is hard to predict for 10 years only. In current days, where the economy is suffering from a long term recession, the borrowers who took mortgage are facing the same problem.
There are many borrowers who have faced a loss of job, reduce in regular earning. In summary, it can be said that their present financial status have declined from what they had in past. So, it is obvious that the present decline in financial status will create problem in their mortgage payment. This is the reason, for which a huge amount of foreclosure have been witnessed by people in 2-3 years. People are becoming homeless for making default in mortgage payments.
Realizing this situation, the mortgage lenders have come up with a solution of loan modification on mortgage.
What is a loan modification on mortgage?
A loan modification on mortgage means modifying the conditions of your existing mortgage loan. A borrower can go to his or her present lender or a new lender for seeking this mortgage modification. If a borrower goes to his or her existing lender, then the lender will measure the left amount of the mortgage that has to be paid by the borrower, along with interest and other charges. After that, the lender might fix a new installment amount that has to be paid by the borrower for a new time span. In most cases, the life span of the loans is extended with loan modification on mortgage facility.
How to obtain loan modification on mortgage?
To obtain the desired modification, you need to go to your existing lender or you can go towards a new lender as well. If you modify the loan from an existing lender, then they will go through your present financial status and then modify the loan upon mutual agreement. If you go towards a new lender, then the new lender will pay the total left amount of mortgage on behalf of you towards your existing lender and then you will pay for new loans, with new conditions towards the new lender. For obtaining this facility, you have to prepare a clean financial statement that clearly states your present financial condition. The statement should also state the reasons for which you need this modification. You can prepare this modification on your own, or you can take the help of experts.