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Debt Cafe Resource Directory
Tuesday, March, 9th, 2010 |
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Consolidate Debt with a Second Mortgage?
A second mortgage is a mortgage that is taken out on a home that already has a mortgage on it. In most cases, you can get a mortgage to cover a home’s value not covered by a first mortgage. If your first home loan, for example, is for $50 000 and your home is worth $150 000, you can get a second mortgage of $100 000. In fact, if your credit score is very good, some lenders may be willing to give you a second mortgage of up to 125% of your home’s equity.
If you decide to apply for a second mortgage, your second home loan will be subordinate to your first, meaning that the first home loan will have all priority for repayment. The second loan will have slightly higher rates, but can still be used to create a consolidated debt since the interest rates on a second mortgage still tend to be quite a bit lower than credit card rates.
To apply for a second mortgage, simply go to a lender to apply. Your lender will look at your credit rating and your home before offering you a mortgage rate and term. In most cases, you will get cash back for your mortgage. You will use the money to repay your creditors and then you will only owe your two mortgages. Since you will likely be paying your second mortgage for a long time, your monthly payments will be quite affordable.
If you own your own home and are overwhelmed by high-interest debt, a consolidated debt using a second mortgage may be for you. Contact a debt consolidating company that offers help with home equity loans and home loans and you will be able to find out whether this option is for you. A debt consolidating company can offer expert financial and debt advice which can help you make the right decision about your home loans.
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