A home equity loan is often referred to as a second mortgage because it is secured against the value of your home, just like your mortgage. However, a second mortgage is typically for a much shorter period than your first mortgage. Typically, someone will take out a second mortgage for a big project such as home renovations or buying a vacation house. Here are some of the basics.
The Basics
The basics of a home equity loan are simple. The equity of your home is the value of your home after comparing to all of the liens against your house. The mortgage is a lien against your house. So if you owe $50,000 on your mortgage and your home is worth $200,000, your home has equity of $150,000. You will then work with a local lender to determine how much money you need and how much money you are eligible to borrow.
Midwest Mortgage Associates Corporation will work with you to determine what kind of second mortgage is right for you. In many cases, a loan can be paid off fairly easily, especially if you are renovating your home. A renovation or addition will add value to your home, which will make your loan even more secure.
Credit Rating
To get a quality loan, you’re going to need pretty good credit. Second mortgages are often fairly sizable loans, which means they are going to need to be very secure. A lender needs to know that you will not only pay back your loan, but will do so in a timely manner. Local lenders are even more dependent on reliable borrowers because a large equity loan that goes unpaid can actually affect their bottom lines.
If you are looking to spend a lot of money on something important, you should work with a local lender on a second mortgage. You can also connect them on Facebook.
