Home Equity Loans 2nd Mortgage | Personal Finance Blogs ...

If you are a homeowner in need of a home equity loan but you have not yet built up any equity in your home, don?t despair. A 125 percent equity home loan may be the answer.

A 125 percent equity home loan is a second mortgage loan that allows you to borrow up to 25% more than the value of your home. For example, if your home is worth 0,000 and you owe 0,000 on the mortgage, this loan program would allow you to still borrow up to ,000.

The 125 percent equity home loan is offered by various online lenders. Each lender has their own qualification and loan term guidelines but generally this is a credit score driven loan program. Credit score driven means that you have to have a certain credit score to qualify for the loan. In addition, your credit score usually determines the maximum loan amount you may qualify for and the maximum cash in hand you may receive. Also, some 125 percent equity home loan lenders may require seasoning on the length of time you have lived in your home. Three months is normally the minimum.

When it comes to a property appraisal, most 125 percent home equity loan lenders do not require you to obtain one. They generally will use the purchase price of your home as the value if you have lived in your residence for 12 months or less. If you have lived in your home over 12 months, a recent tax assessment, simple drive-by appraisal, or automated value model (avm) can be used. An avm is a computer generated assessment of your home?s value which is based on recent home sales of comparable houses in your neighborhood.

About the author: Levetta Rivera is a successful mortgage broker and financial consultant. For more in depth information on various mortgage loan programs including programs for people with bad credit ? visit: http://www.equityloansource.com||http://www.badcreditloanshop.com||http://www.militaryvaloan.com

Source: http://www.articlesbase.com/finance-articles/125-equity-home-loans-75922.html

Frequently Asked Questions

  1. QUESTION:
    What is the difference between a 1st mortgage, 2nd mortgage, and home equity loan?
    I am searching for financing to make home improvement repairs, I submitted a request for a home equity loan through lending tree. The lenders throwing out terms such as 1st mortgage, 2nd mortgage, and home equity loan.

    • ANSWER:
      The # denotes seniority/position in chain of title. A first mortgage is a loan secured by the property that is in 1st position and gets paid what is due them first if the property is sold (municipal liens like property taxes are TRULY first, though).

      A second mortgage is a loan that has a ?junior? position behind a first mortgage. Home equity loan is just a colloquial term generally applied to second mortgages. A HELOC, or Home Equity Line of Credit (as mentioned by another responder) is a TYPE of home equity loan that acts more like a credit card in that you can draw on the equity as needed and pay it back and draw on it again and again during the ?loan? term.

      Technically you can have 3rd, 4th, 5th, etc. mortgages and any of those could be a ?home equity? loan in that they would be loans secured by remaining equity in the property, but that would be highly unusual on a residential property.

  2. QUESTION:
    What happens to my 2nd mortgage home equity loan in a short sale in California?
    I am currently under short sale proceedings in CA. My first has agreed to the terms but my second, which is a non-purchase money loan, is requiring me to sign a promissory note at a reduced balance. The second has agreed to reduce my balance by 65% and payable interest free over 20 years. Should I sign? I believe the alternative to not signing is a foreclosure initiated by the first. Need help fast. Thanks for reading.

    • ANSWER:
      If you have a contract to purchase in a short sale and you do not agree with the second lien holder you can offer ,000.00 to them as total pay off from the offered purchase price contract if the first lien holder also agrees.Most of the time the buyers contract is refused and it still goes into foreclosure because the second lien holder will not accept the ,000.00.
      Good luck

  3. QUESTION:
    Can someone please tell me the difference between a 2nd mortgage, home equity loan and refinancing?

    • ANSWER:
      Yes. Home Equity Loans are more like credit cards and affect your credit that way. They are also almost exclusively adjustable rates. HELOC?s are generally available ?for free? from most major banks. Know why it?s free? Because they are going to make a TON of money from you as long as you have the loan.

      A second mortgage is treated like a mortgage on your credit (better than a credit card). The rates will be higher than a refinance. You must, like a HELOC, have available equity to get a second loan.

      A refinance pays off the existing first and second mortgage (usually) and any other debt so long as the value is there in the home. Some people refinance to pay off other more expensive debt but that usually is not a wise decision. You do not need to have equity in your home if you qualify for a full value refinance.

  4. QUESTION:
    Should I take out a 2nd mortgage or home equity loan to pay off credit cards?
    I?m going to be putting my house on the market soon. Should I pay off the cards now or wait til I sell the house? I expect to make enough to pay off mortgage AND outstanding cards but would like to pay cards sooner.

    • ANSWER:
      I?d wait until the house sells. After all, you could be there a while before it sells. Your house is a secured loan, the credit cards, unsecured. I wouldn?t risk it, especially with the state of the real estate market.

  5. QUESTION:
    Paid off 1st mortgage. Owe 90000 on a 2nd mortgage/home equity loan. Should I pursue a new loan to refinance?
    I am 46 years old. My husband is 50 years old. The rate is 9.25%.

    • ANSWER:
      You owe K on a 9.25% loan and are asking if you should refinance?

      YES, YES, YES.
      Your currently paying around 3 a month in interest.

      Current mortgage rates are around 6.25%. A 3% savings. At 6.25% your monthly interest would be around 8.

      We are looking at a savings every month of about 5.

      The general rule is if it takes more then two years to see a return from the refinancing, you should step back and reconsider the expense.

      In your case, refinancing would probably cost around 00, which you would start seeing a return in 5 months.

      Refinance, get rid of that 9.25% interest, and start saving a ton of money in interest.

Source: http://mysurefinance.com/home-equity-loans-2nd-mortgage/

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