A second mortgage is a mortgage given to a person by a financial institution or the lender to lend money for a second time. The lender gives the borrower a second mortgage. This way, the borrower can afford to buy a home on a second mortgage.
When the borrower’s first loan has been paid off, he or she can request for a second loan for a home. In most cases, a second mortgage is also accompanied with an assumable title to the home.
With the assumption of the home, the mortgagor can use the home as collateral and can ask for an extension of time to pay back the loaned amount. The extension period varies in the states, but usually it is thirty years.
Another important thing that a person must do before applying for a second mortgage is to know the value of the house. He or she should also plan a budget so that he or she can afford the payments for a second mortgage.
The loan amounts are different for the various states, because there are differences in the way mortgages are administered. In some states, there is no need to show the equity or the additional income when applying for a second mortgage.
There are a lot of financial institutions and lenders that offer second mortgages. It’s not just the banks that offer this kind of loans, there are also other financial institutions such as payday loans and car title loans.
After securing a second mortgage from a financial institution, the borrower can still make use of his or her own funds. The borrower can still borrow against the value of the home.
There are also ways for the borrower to extend the life of the second mortgage. This is done through the extension of the loan period.
The period can be extended until the borrower decides how much he or she wants to borrow. The period may also be prolonged up to the death of the borrower.
The Federal Government has also provided programs that can be used to help a borrower to finance his or her second mortgage. The borrower can avail of these programs through the Federal Housing Administration or HUD.
There are other loans as well that the borrower can take to finance the home. A person who is able to secure one of these loans can also continue using the second mortgage until the later end of the borrower’s mortgage term.
This is a great opportunity for the borrower. He or she can get a second mortgage at a lower interest rate and in the end have more money.