How Do Second Mortgage Loans Work?

If you need extra money for home improvements, debt consolidation or even to purchase an additional home then a second mortgage might be exactly what you are looking for to make that happen. However, when you hear the term second mortgage you might not be sure exactly what it means. To put it simply it is just another mortgage on your existing home. Basically you are borrowing money for one or more reasons and using your home as collateral.

The term "second" means that the loan you are taking out does not have priority on your home if for some reason you can't pay it back on time.



In all cases the initial mortgage on your home would be paid before any money would go toward a second mortgage payment. With that being said, the next question is why in the world someone would put their home up as collateral for money. Well, the answer is that you shouldn't unless you are in a situation where you need a large amount of money fast.

Western Vista Federal Credit Union in Wyoming notes that a "second mortgage is what it says - the second loan against a specific piece of property.



Consider this example: Let's say you have a first mortgage on your home. The value is $100,000 and you have a $60,000 balance left to pay on your loan. The $40,000 difference is considered equity, or the part of the home that you own outright. If you wish to further borrow against that $40,000, you would be taking out a second mortgage on the home in order to do so. Why borrow against this equity? In many cases, the interest rate you pay on your mortgage is lower than many other types of loans.



Interest is also frequently tax deductible for a first or second mortgage, but not necessarily for a car loan or a credit card."

When a person borrows money against their home that's a large chunk of change being used for collateral and it also allows the borrower to get a bigger loan. There are some disadvantages to second mortgages such as the fact that you are taking a chance with your home should something happen and you have trouble paying the second mortgage back.



Take a look at the interest rate on a second mortgage too. You can probably expect the rate to be a bit higher because it is riskier to the lender who knows that if a default occurs the primary mortgage gets paid first and then the second mortgage. You can also be choosy about a second mortgage so check more than one source when trying to make a decision. Watch out too for balloon payments, which is a payment that starts out low and rises as time goes by.



If possible, choose a fixed interest rate. Also be aware that second mortgages, like any other loans, have additional closing costs. There are the appraisal fees, application costs and other closing costs that can be as random as title searches.

At the Mortgage101 they say, "Many companies will charge a fee for lending you money. The fee is usually a percentage of the loan and is sometimes referred to as "points." One point is equal to one percent of the amount you borrow.



For example, if you were to borrow $10,000 with a fee of eight points, you would pay $800 in "points." The number of point's mortgage companies charge varies, so it may be worthwhile to shop around."
You also want to make sure you get a second loan that allows you to keep your first mortgage.

In the long run second mortgages are a good bet for home improvement financing and some second mortgages can even be extended for up to 20 years.



Remember though, it's not only home equity lines of credit that don't outline the amount of the monthly payments so read your contract. There are many second mortgage loans that don't either. Joe Prussack notes, "Everybody loves low monthly payments… These popular 2nds' (second mortgages) also usually have adjustable rates so these loans aren't for the faint hearted." In this case, if you are one of the fainthearted then stick with a fixed interest rate versus one of the variable interest rate loans.



This way you will know exactly what payments are expected each month be it for a second mortgage or another type of loan in order to secure a big ticket item that you have needed for the past few years.

Rita is a seasoned free-lance writer who has produced many popular articles related to real estate financing. To learn more about cash out second mortgages and equity loan options, please check out the Second Mortgage Refinance programs.

If you need more expert advice for the 2nd Mortgage & Home Equity Loan process, please visit BD Nationwide Mortgage.

Four Ways To Save Money On Your California Home Mortgage

You are already probably paying hundreds of thousands of dollars for a home in California or more. So you certainly do not want to spend unnecessary additional money on closing costs, lender fees, higher interest rates, and other hidden costs. Ways to save on your home mortgage are not immediately obvious, especially when you are not familiar with all the ways lenders can tack on additional costs to the total amount of the mortgage. Use these tips for ways to save money on your home mortgage.



Make sure you are choosing the right type of home mortgage for your situation. When it comes to the total cost over the duration of the loan, the 30 year fixed rate home mortgage is the most expensive, with one exception. If you plan to live in your home for the length of the loan, it is the best home mortgage. As you shop for mortgages, take into account how long you plan to be in your home. Let that length of time determine the type of loan you get.



As a general rule of thumb for shorter periods of time, choose an adjustable rate loan, and for longer ones choose a fixed rate.



Try to negotiate with your lender. There is absolutely nothing wrong with asking your lender for a better interest rate or to eliminate some of the fees associated with your home loan. Consider the fees for which the lender makes no money: appraisal, inspection fees, processing fee, title fees, private mortgage insurance, and credit report fees. Anything outside of these fees is fair game to be negotiated with the lender.



Do not hesitate to ask your lender to take away some of the unnecessary fees.



Make payments more frequently. If you get paid on a biweekly basis, consider making biweekly home mortgage payments. Each time you make an extra payment, even if it is just one, it shortens the life of your loan. By making two payments a month instead of one, it takes you a little over 23 years to repay a 30 year fixed rate mortgage. Any extra payments you make toward your home mortgage go toward the principal of the loan.



So, the balance of the principal, rather than the interest, is reduced by any extra money you pay. When you do this, you can reduce your home mortgage payment dramatically as stated above. Before you make extra payments, make sure your agreement did not include a charge for early repayment.



Try to avoid paying private mortgage insurance. You are required to pay PMI when you make a down payment less than 20 percent of the amount of the loan. The amount you pay in PMI could be used to make extra home mortgage payments or invested in a high yield investment account.



If you are already paying PMI, watch your equity closely and drop the insurance once you have 20 percent equity in your home.



There is no sense in paying extra money in interest and other home mortgage costs unless you absolutely must. By using just one or two of these methods you can save thousands or even tens of thousands of dollars in the total cost of your mortgage. When you take steps to reduce your costs, make sure you are not decreasing one cost and increasing another simultaneously.

How Free Giveaways Can Help Get You All The Mortgage Clients You Want

Offering free giveaways to mortgage prospects and clients is a powerful business building strategy that can result in a flood of new and repeat mortgage clients.



It may seem counterintuitive to give away your services to build your business; however, people can't resist the lure of receiving something for free. The word free, as worn out as it may seem, is still the most powerful word in marketing and has a hypnotic effect on people.



Why Free Giveaways Work



The reason free giveaways work so well is two-fold.



First, prospects that test your service risk-free will hopefully recognize its value and want more of what you have to offer. Or even better, your prospect will get "hooked" on your service and become loyal lifetime client.



Second, the fact that your mortgage advice was given to your prospects as a free gift will compel them to return the favor by continuing the relationship with you. This principle is called the "Law of Reciprocity," which simply states that people naturally feel an obligation to return favors as a way of expressing their thanks.



Information - The Ultimate Free Giveaway



Ideally, it's best to offer free giveaways that are low cost but have a high perceived value to the person you are giving it to. Information is a great example of a free giveaway that has a low product cost and a high perceived value. This is why it's smart for mortgage professionals to use special reports containing "insider" information as a free giveaway for lead generation.



Your free information could come in the form of a written document, an audio CD, a 1-on-1 consultation or a live seminar that your target market would be interested in.



Regardless of what form you choose to deliver your free information product, the key is to make it relevant and valuable to your target market. If done right, your free educational resource will instantly position you as a "trusted advisor" and "expert" in your industry.



Free Giveaway Case Studies



There are a myriad of ways to offer a free giveaway and many effective types of giveaways (other than information) that your mortgage business can use to attract a steady flow of new clients.



The following are a few ideas on how to give away information to close more deals with less effort:



Idea #1 - Free Special Report



Start by jotting down the most important things your target market needs to know to avoid mistakes, minimize risk, eliminate frustration and have a stress free financing experience. What comes to mind might seem elementary to you but these little "secrets" can truly make a world difference to your prospects. Once you've created your outline, go ahead and start writing your report.



If you're too lazy to do that, consider enrolling in my Mortgage Superstar Coaching Program, where I provide 5 "Done for You" reports that you can use right away!



Idea #2 - Free Audio CD



Offer a free audio CD to your prospects and newsletter subscribers. Audio CD's are simple to produce (I take you step-by-step through the process of creating your own audio CD in my coaching program) and it's very inexpensive.



Idea #3 - Free Checklist



People love step by step direction and guidance.



People love simple steps that they can follow. Why not take what you know and create a checklist that you can offer as an "ethical bribe" for lead generation efforts.



To attract new clients you should offer your free giveaways to prospects that haven't yet done business with you. You might even partner with a non-competing, but complimentary business and do a joint venture offer where they endorse your free offer to their client database.



Justify Any Deal That's "Too Good To Be True"



If your offer that includes free giveaways appears "too good to be true" to your prospect, it could decrease the believability and credibility of your offer.



To avoid this you should always give the reason why you can offer such a great deal.



Remember, your prospect is very skeptical and has good reason to be. We've all been duped at one point in time by a "too good to be true" scam. Furnishing your prospects with the reason why you can offer them such a good deal helps them to logically reconcile your offer in their minds. In turn, this will give your prospect the comfort level needed to act on your offer.



Conclusion



Using free giveaways is an effective mortgage marketing strategy if used correctly.



Think about what you can offer free-of-charge that your prospects would consider valuable and that you can give at a low cost to you.

A Silver Lining: Loans for People With Poor Credit

Being financial unstable is quite a catchy situation. Worse of all bad credit; this means you have a very poor credit score. This literally leads you into a wide labyrinth of troubles. You are suddenly faced with a situation where money becomes the primary factor. But you are turned off as a person with bad credit. It is quite a difficult task availing a loan with poor credit. But as they say "every cloud has a silver lining". You are welcome to the world of loans for people with poor credit.

Before we discuss in detail loans for people with poor credit, you must be aware of the credit grades which are a tool to determine your financial condition.



Credit grade A+ to A- gives you a credit score of 660 -670. This means an excellent credit. No credit problems in the last 2 to 5 years and no bankruptcy for the last 2 to 10 years is enough to give you a credit grade of A+ to A-.

Credit B+ to B- gives you a credit score of 620.

Credit score C+ to C- gives you a credit score of 580, with late payment within 30-90 days range.

Credit grade D+ to D- gives you a credit score of 550, with lots of missed payments.

Credit grade E+ to E- gives you a credit score of 520 or lower.



This means possibly bankruptcy.

A credit score of 520- 550 bracket is said to be in bad credit or poor credit. A bad credit history includes arrears, default, bankruptcy etc. Worse of all bankruptcy lasts for seven years on ones credit record. Loans for people with poor credit provide respite to these people, who are possibly struggling with their current financial situation

Having a bad credit does not mean all door are shut off upon you. Loans for people with poor credit are always available.



If you are in a dilemma, as to how the lender negates the risk involved check with a sub prime lender. This is certainly a disadvantage considering loans for people with poor credit. The lender of course negates the risk involved by offering loans at a relatively higher interest rate and the loan amount too is substantially low.

This of course can be negotiated easily by giving proper time for research work on the web providing lenders in plenty. This enables you to compare interest rates of different lenders and you are serving to land up with the best deal.



A variety of loans for people with poor credit are available. This includes bad credit personal loans, bad credit debt consolidation loans, bad credit fast cash loans, bad credit mortgage loans.

Loans for people with poor credit are certainly a silver lining for the dark cloud prevailing before you. This is certainly the best possible choice for the people with poor credit. The loan would certainly seem to be the savior.

Steve Clark can tell you how to look better, live better and breathe better by giving you tips to improve your finances.



He writes on loans. His ideas can help you rejuvenate your money. To find Personal loan UK, secured loans, unsecured loans visit http://www.ezpersonalloansuk.co.uk