Although there are many ways you can use a Second Mortgage, the underlying theme behind most of them is this: you are a homeowner and you need more money. Perhaps your home needs a new roof; you can apply for a Home Improvement Loan, Home Equity Loan, or Home Equity Line of Credit. Perhaps you have a large, unforeseen medical bill; again, a Home Equity Loan or Line of Credit may be your answer. Or perhaps you find that all your monthly bills are too much for your budget to handle. In this case, you may want a Debt Consolidation Loan. Whatever your circumstances may be, if you have home and need money, a Second Mortgage may be the solution to your problems.
How does a Second Mortgage work?
A Second Mortgage is a secured loan that is placed in second position on your title. Like a first mortgage, it uses your home as collateral. Second Mortgages generally come with higher rates because they are more risky for a lender to give. If the borrower goes into default, the first mortgage is paid off in foreclosure before the Second Mortgage, so the Second Mortgage may not always be paid off in foreclosure.
Second Mortgages Uses
Second Mortgages come in all shapes in sizes. A Second Mortgage could be a Home Improvement Loan, a Home Equity Loan, a Home Equity Line of Credit, a Debt Consolidation Loan, or a Bad Credit Second Mortgage among many others. There are many ways to get a Second Mortgage; it just depends on what you need.
How can my credit score affect my mortgage rate?
Your FICO is always an important factor in determining your mortgage rate. Although some lenders offer Bad Credit Mortgages for people with low credit scores, your interest rates will be lower if you have good credit, because the lender considers you less of a risk. You can get a free credit report online. A-Paper Credit scores fall between 720 and 850. The cutoff score for SubPrime lending is 620.
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