Welcome to Mortgage Guide
Mortgage Lead Article
. For a permanent link to this article, or to bookmark it for further reading, click here.
Why Some People Take Out a Second Mortgage
from: Mortage & Debt FactsThe term “second mortgage” is easier to understand than home equity loan, but they are essentially the same.
A second mortgage is any new loan, beyond the primary mortgage, taken out holding the home as the collateral for the loan. While, you can use a home equity loan to get money out of your home while still living in it, there are also other uses for second mortgages that are not tied to a home equity loan.
There are different situations and times when people may try to get a second mortgage to save money or to tap money in equity.
Two Mortgages at Closing
Some people took out second mortgages during the closing of their first mortgage as a piggyback mortgage. This allowed them to put down the needed 20% as a down payment and avoid private mortgage insurance (PMI) costs.
This works out well for buyers who have this type of access to credit but are low on down payment funds. If they only had 5 or 10% to put down, the PMI would automatically be triggered and added to their monthly payment.
However, if they took out two loans and used the second to bring down the primary mortgage’s loan-to-value ratio then they wouldn’t have to pay PMI.
The difference in monthly payment is not that significant using this strategy, but there are other paybacks – including the ability to deduct the second mortgage’s payments from your taxes, in some cases.
PMI, on the other hand, gives you no such tax benefits. Equity also accrues faster by taking out two mortgages upon closing to satisfy the PMI requirements.
The problem with this approach is that lenders are becoming wary of allowing someone to immediately take out a piggyback mortgage to bring up the loan-to-value ration of the first mortgage. If the home approaches foreclosure, the second mortgagee holder finds themselves in the position of absorbing a loss or having to buy the primary mortgage to get something out of the foreclosure on the piggyback mortgage. So, this type of financial two-step may end up being harder and harder to get approved by lenders.
Home Equity Loan
The other type of second mortgage strategy is to get a home equity loan after closing. This can be done any time, as long as the value of your home and your equity in it is enough to support the loan.
There are risks for the borrower as the home is being used as collateral. If the home equity loan terms are not satisfied or payments are not made, the lender can foreclose even though it is not the primary mortgage. So, this type of financial tool should be taken on only after carefully reviewing the risks and benefits of a home equity loan.
Mortgage Lead Specific links
Mortgage Lead News
The Perfect Storm for Mortgage….and Mortgage Leads - WiredPRNews.com (press release)
The Perfect Storm for Mortgage….and Mortgage Leads WiredPRNews.com (press release) Those who have been looking to get into a new home or as first-time buyers could not be much happier, nor those looking for online mortgage leads as a new record low for mortgage rates hit for the third week in a row. FindMyLeads.com, a seller of ... |
American Capital Mortgage Investment Corp. Announces Pricing of Public ... - MarketWatch (press release)
American Capital Mortgage Investment Corp. Announces Pricing of Public ... MarketWatch (press release) Barclays Capital Inc. is the lead manager for the offering. Wunderlich Securities is the co-manager for the offering. The offering will be made pursuant to MTGE's existing effective registration statement, previously filed with the Securities and ... American Capital Mortgage Plans 10 Mln. Common Stock Offering - Quick Facts American Capital Mortgage Investment Corp. Announces 10M Stock Offering |
Whistleblowers wanted for mortgage fraud probe - Politico (blog)
Whistleblowers wanted for mortgage fraud probe Politico (blog) By DARREN SAMUELSOHN | President Obama's task forcing probing mortgage fraud is offering "substantial financial help" to whistleblowers who help them find the bad guys. "We are particularly interested in information from corporate insiders – that is, ... |
Foreclosure-prevention efforts bog down - Kansas City Star
 Mortgage Rates & Trends | Foreclosure-prevention efforts bog down Kansas City Star Jerry Brown is pushing to use some of California's share of the $25 billion national mortgage settlement to plug holes in the state's budget, dismaying housing activists. Since the start of the real estate bust, foreclosures have been a persistent drag ... Deo Buddhu Accused Of Mortgage Scam Promising False Federal Aid |
Fortress Seeks Servicing Rights From $4 Trillion Sale: Mortgages - Bloomberg
 Bloomberg | Fortress Seeks Servicing Rights From $4 Trillion Sale: Mortgages Bloomberg Wells Increases Lead The largest mortgage lenders -- Wells Fargo & Co. (WFC), Bank of America Corp. (BAC), JPMorgan Chase & Co. (JPM) and Citigroup Inc. (C) -- controlled 50.3 percent of the servicing market at the end of the first quarter, ... |