Consolidating first and second arm mortgages
Taking out a second mortgage on your home used to carry some stigma with it - a sign that you were in financial trouble.But today, the ability to borrow money against your property is considered one of the biggest advantages of owning a home.Using a second mortgage for debt consolidation is one way of solving your debt problems.However, before opting to take this route you must consider the pros and cons.For instance, if you house is appraised for 0,000 and you owe 0,000 to a mortgage company, your equity in the home is ,000.That would be the maximum you could borrow on a second mortgage.However, the closing costs (often 2-3 percent of loan amount) are often higher than your first mortgage and the rate is also usually higher.
Your original lender may simply do a drive-by to see that the home is in good repair and may even accept the latest real estate tax bill estimate of the property's market value.
The new lender will require personal information, including asset values, in order to determine whether or not to offer a loan.
There are two types of second mortgages: fixed and variable rate.
Many people opt to take a second mortgage out on their homes to help with emergency expenses.
Second mortgages can be a way for many people to adjust their financial obligations and to pay off high-interest credit cards or unexpected hospital bills.