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A second mortgage is a mortgage loan that is subordinate to a first mortgage on a home. They are sometimes called Home Equity Loans or Lines. Second mortgages are available in many different forms and terms. Second mortgages allow borrowers to access the equity in their homes without changing the first mortgage. In many cases the first mortgage has a very low rate or is far enough into repayment that the borrower does not want to start paying a lot of interest. Second mortgage closing costs are typically lower than those of a first mortgage.
Concorde Lending Services, Ltd. offers the following second mortgage programs:
Home Equity Line of Credit (HELOC): This is our most popular second mortgage program. The line of credit operates like a checkbook. You use the checks to draw on the equity in your home. Your payment is based on the amount of money you have drawn against the line. The less you draw the less you pay. These are great for home improvements, debt consolidation, starting your own business, or to keep idle as an emergency fund.
Fixed Rate/Term Loan: Available from 5 to 20 years. This offers the security of a fixed rate and payment while making a defined amount of your equity available. This is basically an installment loan tied to the equity in your home.
Frequently Asked Questions - Second Mortgages
Q: When does it make sense to take a second mortgage?
A: Based on your overall financial circumstances there are many time that a second mortgage makes sense.
1. If you are more than 10 years into your first mortgage. You can access equity without starting the amortization of your first loan at year one.
2. When your first mortgage has a lower rate than the current rate being quoted. Many times you can find an inexpensive second mortgage to access your equity.
3. If your credit rating has worsened since you closed your first mortgage. You can use your new second to consolidate your debts while keeping your first mortgage in place.
Q: What is the difference between a Home Equity Line of Credit and A Home Equity Loan?
A: These two products are often confused. A line of credit allows you continual access to your home's equity throughout a period known as the draw period. This period usually lasts for 5 or 10 years. You access the equity via check and pay only on the amount of the balance that is drawn against the home. After the draw period ends you have a set period or term to repay the loan, usually 5 to 10 years. A Home Equity Loan is a loan for a fixed amount that is funded in a lump sum. You then make fixed payments over a fixed term. This is like an installment loan.
Q: Which is better?
A: That depends on what you are using the money for and how you need to access it. If you need the money in one lump sum and like the idea of a set payment for a set term, the loan is a better option. If you will need the money in smaller amounts over a longer period of time, the line makes more sense. Since you won't need all of the money right away, you won't have to pay for it until you need it.
Q: Are the payments on my second mortgage tax-deductible?
A: Yes. The amount of the tax deduction will depend on a variety of factors. It is best to check with your tax advisor to determine this.
http://www.concordelending.com/concerns.htm#Second |
