A second mortgage is a loan that is taken by using the equity on the already mortgaged property which is used as collateral. The equity can be used by the homeowner for financing other projects. The mortgage is referred to as the second mortgage because they already have a first mortgage. When you are taking a second mortgage, the interest rates are higher than the first one as the first mortgage takes precedence over the second one. While deciding to take a second mortgage, reach out to a Certified Mortgage Broker. They will help you get the best deals from the lenders offering private mortgages.
When you plan to apply for any kind of loan, there is a certain procedure that needs to be followed. The process for applying for a second mortgage is similar to the application for the first one. Though most brokers and lenders offer second mortgages, very few are willing to do so as second mortgages have a higher risk. It is so as there is already a mortgage in your name, which will increase the debt-to-income ratio. If you are planning to apply for a second mortgage, the following factors will help you to qualify for one.
Great Credit Score
Private Lenders are known to provide loans to those with a low credit score. When you plan to take a second mortgage, it is crucial to have a good credit score. The score should at least be 600 and preferably between 700-900.
Equity is the value of the home that is no longer a mortgage. With time the equity keeps increasing as the value of the property increases, and you continue to repay the loan. You have a better chance at securing the second mortgage when you are closer to fully owning your home. The amortizing mortgage, the better.
Stable Source of Income
When taking a second mortgage the lenders become more strict about the source of income being stable. The source of income should be such that it should cover the debt for the foreseeable future.
Reach out to a certified broker
All the factors stated above will help you to secure a second mortgage. There are two ways to receive the payment for the second mortgage. You can take it as a single lump-sum payment. You can secure a Home Equity Line of Credit, which means you have a line of credit available when you need it. You don’t have to pay interest on it till you need it. Whatever your requirements for the second mortgage are, a Certified Mortgage Broker will help you to find the best offer. Taking a second mortgage is never an easy step. You need the experts by your side to help you tread these unknown waters. A Broker will answer all the questions that you have and help you to secure the second mortgage.
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