The Second Mortgage Home Equity Loan

A second mortgage can also be referred to as a home equity loan. It is in essence a secured loan that is second, or subordinate, to the first mortgage against the property. The key issue for anyone getting this type of loan is the amount of equity they have in their home. This will ultimately determine the amount of money that can be secured for the home owners use.

Equity is the amount of money that is paid down on the home, or it can be the value of the home minus any loans owed on the home. The main reason for taking out a second mortgage is to take equity from your home and turn it into cash in pocket. What this means is that if you have enough equity in your home you can borrow money using your home as collateral. There are three basic types of loans to choose from: the traditional second mortgage, a home equity loan, or a home equity line of credit.

A second mortgage should not be confused with a mortgage refinance or re-mortgage. When you refinance your first mortgage you are replacing your old loan with a new loan, usually at a better interest rate. A second mortgage, or home equity loan, is another loan in addition to the primary loan, which will result in two monthly payments. It is important to distinguish the two to make sure that two payments will not seriously affect your monthly budget.

The interest paid on a second mortgage, up to the first $100,000 borrowed, is tax deductible provided that the loan is on your primary residence. It should be noted that interest rates on home equity loans are generally higher than a first mortgage, usually in the 2-4% higher range. But the interest rate on a this type of secured loan will be lower then on an unsecured loan, such as a car loan, and much, much lower then you will find on a credit card.

The common reasons to get a home equity loan are to pay off high interest credit cards or other higher interest rate debts, refurbishing the home, urgent family matters such as education, medical, etc. This is called debt consolidation and refinancing and is a good way to tap the asset value of your home to meet your investment and budget needs, and helps you avoid incurring high interest unsecured debt like credit cards. If you have extensive credit card debt, and are not making progress in paying it off on a monthly schedule, a second mortgage may be a good move.

There are a couple of things that anyone getting a home equity second mortgage should be aware of. A second mortgage puts a second charge on your home, meaning that the second mortgage provider can take a share of any proceeds if your home has to be sold. What is worse, if you pay the first mortgage but fail to pay the second, that mortgage provider can seize your home, even if the sum involved is relatively small.

Getting a second mortgage home equity loan can be a good way to use the equity in your home to do any number of things. Like all financial decisions using a second home loan should be carefully considered in all aspects. If it makes sense and fits within the monthly budget then it is something to be strongly considered.

Getting the Best Second Mortgage Interest Rate

A second mortgage, or a home equity loan, is a good option if you've got climbing debt and some equity built up in your home. Taking out a home equity loan or a home equity line of credit may be a viable solution for you, but only if you find the right second mortgage interest rate.

You can use the funds from your second mortgage or line or credit in order to pay off debt, do home renovations or consolidate your bills. However, if you're using it to pay off debt and you don't do anything to adjust the way that you have been spending money then you'll end up overspent again in just a few years. Don't think of a second mortgage as a band-aid to a bad spending habit. Take out the second mortgage but also start using a family budget and control frivolous spending.

That being said, getting a good second mortgage interest rate is definitely possible even in today's market where interest rates are starting to climb. Even with the increases, they are still lower than they were ten to fifteen years ago. If you have an older home, it's still a good time to take advantage of the equity built up in your home.

Getting a good second mortgage interest rate is easier than applying for your first mortgage. With second mortgages, there isn't quite as much paperwork, or as much time to wait for approval. Since you have the collateral of your home you represent a lower risk to the lending institution.

There are two types of second mortgages to choose from: the second mortgage loan and the second mortgage line of credit. Your second mortgage loan acts a lot like your first mortgage. You receive a lump sum of money. The second mortgage has lower closing costs than the first, but you are also paying a higher interest rate with the second mortgage.

The second mortgage line of credit acts like a credit card with a standard credit limit, but a line of credit has a variable rate. The interest will change depending on the month, which can be really great when interest rates are low like they have been lately, but difficult if they are high. You can use your line of credit as long as you have funds, but there is a cap to how much you can spend. At a certain period of time, 5, 10 or 20 years in the future, you won't be able to borrow on the line of credit any longer and you'll have to start making standard monthly payments. Up until that point, you can pay off as much or as little as you'd like to each month.

Just like with your first mortgage, you'll want to shop around to get the best second mortgage interest rate. Determine whether a loan or line of credit would be best for you, and then take steps to improve your overall financial picture by using the equity in your home.

What You Need To Know About Second Mortgages

So many home owners think about getting a second mortgage. Others don't even know what it means. Today I will raise a few points to explain what second mortgages are and what you need to consider when youre taking that route.

What is a second mortgage?

A second mortgage is basically taking out a second loan on top of the existing loan on your home. This loan is secured with the property for collateral. If for example the value of your home is $200 000, but you still owe $140 000 on the loan, then the $60 000 difference is known as your equity. When borrowing against the $60 000, you would then be taking out a second mortgage.

Why take out a second mortgage?

People take out a second mortgage for various reasons. They want to finance home improvements, purchase a second home, consolidate other debt for a lower interest rate, purchase a new car or pay for university tuition. Whatever the reason may be for taking out a second mortgage, first make sure there is a way of recouping the money. It is especially not wise to spend a vast amount of money on a car when it already starts losing value the moment you drive out of the dealership. It makes more sense investing in a business.

Refinance is an option

Before you decide to apply for a second mortgage, first consider refinancing. Firstly, taking out a second mortgage usually implies a higher interest rate. Rather keep your current rate or try and refinance for a lower one. Secondly, sales people get a lot of commission out of second mortgage transaction. Lastly, when choosing to refinance, you keep some equity in your home. And if there is really an emergency you, still have an exit door. But, if the prices of houses fall the value of your house is down, you could end up with negative equity and even more debt.

What to look out for

The interest rate of a second mortgage tends to be higher than the primary mortgage, due to the fact that if any problems occur, payment would first be made to the first mortgage.

Companies also charge a lending fee, also known as points. One point is equal to one percent. For example, if you are borrowing $500 000 with a lending fee of 10 points, you will pay $50 000 in points. The points differ from one company to another; therefore I recommend shopping around before making a final decision.

Be aware of balloon payments where payment starts low, but increases very quickly. Rather take the fixed rate option.

Lastly, dont forget the additional closing costs such as, appraisal fees, application costs etc. If you arent capable of paying these fees, you may not be able to take out that second mortgage on your property.

If you are considering applying for a second mortgage, please think it through very carefully and consider all your options before making a final decision on taking out a second mortgage application.

Exposed: the Truth About Baby Boomers' Second Homes

Contrary to the common belief that baby boomers are the richest amongst us, up to date statistics are now telling us that, in this generation, only the same percentage owns second homes as was the case with their parents. And this could even just be because they inherited!

So why do we all think that the baby boomers have it all together? Is it because we think they can economize so well? They were raised by parents who went through the war and grew accustomed to a frugal way of life. Is it because we read that they are going to be the last generation to have a big fat private pension?

In fact, we may have this assumption because of a misunderstanding or skew in the reporting of such facts. There is some truth in the fact that baby boomers have caused the second homes market to increase considerably, but this is only because the baby boomers form such a large portion of the population.

Therefore, more second homes have been bought, but only the same percentage of the whole population of baby boomers have actually managed to buy a second home. It is the aging population that has swelled, not the desire for a second home.

A recent survey, "Housing Trends Among Baby Boomers", has thrown up some interesting facts. The research was conducted by the Research Institute for Housing America: a section of the Mortgage Bankers Association. Perhaps the most surprising fact unearthed was that only 15
% of homeowners over 50 own a second home. This is about the same percentage as in their parents' generation.

However, this does not imply that the other 85% stick at home all the time. An extremely popular 'getaway' for the baby boomers and other older cohorts is taking the RV to a resort and spending several months in the warm. This is commonly known as 'snow birding'. It is also a popular past-time when retired to drive the car to an RV resort and rent an RV for a few months.

The survey on second homes and baby boomers turned up another interesting fact that any prospective second-home-owners should mull over. It seems that half of second home owners spend only two weeks or less at their second home, and one third spend four weeks or less - quite an eye opener. Perhaps this explains why 45% of second home owners in the survey sold their homes after six years.

This could indicate that a vacation home nearer to home may get more use. It may also mean that your extended family could afford to use it more often (either with or without you) if it were reachable by car.

Most baby boomers who are downsizing or looking for a second home do not seek out urban areas. Demand for second homes is strongest in California, Florida and New England as well as desert, mountain and coastal regions all over the country.

The demand for mortgages on second homes only accounts for 6% of the mortgage market. However, the report also noted that many second homes are inherited by baby boomers or bought with cash.

Reasons for choosing to buy a second home seem to be very varied. The idea of having a vacation home that will eventually become a permanent retirement home seems to exist only in our fantasies! However, the survey tells us that it does still happen; 12% of all baby boomers owning second homes eventually sell their first home and retire to the second home.

Getting A Second Mortgage Refinance: How Difficult Is It?

We have all heard about a mortgage refinance, but what is a second mortgage refinance? Is it possible to take out a second mortgage on your home and refinance it? Often homeowners take out a mortgage after making many plans. Their plans do not work out, and there is often a need for more funds. Alternatively, there could be a debt crisis. Here a second mortgage can be of great help. The first one is repaid, and a second mortgage replaces it.

The amount of equity you hold in the first mortgage decides your second mortgage. There could be any number of reasons for taking out a second mortgage tuitions, holiday expenses, starting a home based business. Some second mortgages are also a method of debt consolidation.

Types Of Second Mortgage

There are three types of second mortgages to choose: home equity loan, line of credit and a second mortgage. A line of credit is curtailed based on the value of the first and second loan. You can withdraw this money whenever you wish to. In addition, this credit can be repaid within a fixed time, but does not need regular monthly payment.

Interest Rate

The interest rates on second mortgages tend to be higher than a first mortgage. This is the reason why careful financial planning is required. Then again, if interest on the first mortgage was high, and the mortgage rates start coming down, switching to a second mortgage is a good idea. The idea is to replace the high interest first mortgage with a lower interest second mortgage.

Poor Credit

What happens if your credit record is poor? You may have defaulted on the payment of the first mortgage. In this case, you will find it difficult to get lenders for the second mortgage. You can approach a loan broker for help. A loan broker will be able to find a lender who can give you second mortgage refinance at the rate you need. It is a good idea to approach more than one lender, so that you can compare quotes. Go for the loan scheme that has the least interest rate.

A second mortgage refinance is very useful when you need funds or have debts to clear. It also helps you save tax. Some second mortgages can help you save more than the first mortgage. For all these reasons, second mortgage refinance has become popular with homeowners in the US.

Second Hand Smoking: Medical or Physiological Effects

Secondhand smoke is a combination of the smoke produced from a burning cigarette and the smoke exhaled by the smoker. Second-hand smoke is also known as passive smoke or environmental tobacco smoke (ETS). Mostly the term second-hand smoke is used as opposed to ETS because the latter infers a relationship between tobacco smoke and the environment in general resulting in confusion about its exact meaning. Such environmental tobacco smoke (ETS) can be easily recognized by its distinctive odor as it contaminates the air and gets retained in clothing, curtains and furniture, etc.

However, it is not just limited to irritation; ETS represents a dangerous health hazards across the globe. Over 4,000 different chemicals have been identified in ETS, and around 50 of these chemicals are known carcinogens. Some of the commonly found chemicals in secondhand smoke include, but are not limited to:

• Benzopyrenes: These are otherwise found in coal tar, one of the most potent cancer-causing chemicals.
• Formaldehyde: It is normally used to preserve dead animals.
• Hydrogen cyanide: It is used in rat poison!
• Ammonia: It is used to clean floors and toilets.

Breathing second-hand smoke can be more dangerous than inhaling smoke through a cigarette. It has twice as much nicotine and tar as the smoke that people smoking inhale and five times more carbon monoxide, a deadly gas that starves your body of oxygen.

Harmful effects of Passive Smoking:

People who do not smoke, and who are exposed to the toxic chemicals in second-hand smoke on a regular basis, can suffer serious and life-threatening health problems. In the long term, people exposed to second-hand smoke have a greater risk of suffering from lung cancer, nasal sinus cancer, heart disease, stroke, and breathing problems, including increased coughing, wheezing, pneumonia, bronchitis, and asthma. In fact every time a person breathes in second-hand smoke, he/she consumes over 100 harmful chemical agents - carcinogens and toxins.

People who live with someone who smokes and are exposed to tobacco smoke on a regular basis have around 30 per cent increased risk of developing lung cancer and heart disease. Even as little as 8 to 20 minutes of passive smoking can cause physical reactions linked to heart disease and stroke, such as increased heart rate, less oxygen to the heart, and constricted blood vessels that increases blood pressure and makes the heart work harder.

Effects on Infants:

Children are at even higher risk because their lungs are still in a stage of development and can be more easily damaged by second-hand smoke. Infants also inhale more amount of the smoke because they breathe much faster than adults. Infants who breathe second-hand smoke have a greater chance of dying from Sudden Infant Death Syndrome (SIDS), also known as crib death. More than three times as many infants die from second-hand smoke-related SIDS as from child abuse or homicide. Effects of tobacco smoking on children is more than adult person. Children who are exposed to second-hand smoke have double the risk of getting bronchitis and pneumonia.

Second-hand smoke can affect children's behavior and their ability to understand and reason. Studies have shown that children who are regularly exposed to second-hand smoke score lower on tests in reading, math, logic and reasoning skills. For children with asthma, exposure to even small amounts of second-hand smoke can trigger an asthma attack. Breathing second-hand smoke can increase the number of asthma attacks. Exposing children with asthma to second-hand smoke in the home increases the number of emergency room visits and hospital stays. Exposure to second-hand smoke can cause children without asthma to develop it.

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Your Second Home

If you've recently taken the plunge and purchased a second home, or are considering doing so, there are a lot of special considerations to think about. Owning two homes is roughly twice the responsibility, twice the expense, and presents unique problems. However, all of these are manageable, and that second home can be extremely rewarding if it is managed properly.

Many people buy a second home so they can feel a bit of ownership over their favorite vacation spot. Sometimes it's because their lifestyle demands they have a guaranteed comfortable and accommodating place to come to whenever they want (for example, no one can tell you no pets are allowed!). Some buy a second home out of necessity because of a job that requires travel, or a spouse who works in another city. Whatever your reasons for buying a second home are, one thing is certain: you can't be in two places at once. When there are two homes, one is likely to be the primary home and one will be empty much of the time. Many people find success in renting their second home out to vacationers during the times they won't be there. This helps to pay the mortgage and also helps your home not seem abandoned.

However, renting your second home means you've essentially got groups of strangers taking turns staying in your home. In between guests, it will need to be checked for damage and cleaned. Depending on where this home is and how much time you've got on your hands, these jobs may be better handled by a property manager than by you. Having a property manager you trust can take a lot of the stress out of managing your second home. If managed carefully, your second home should easily be able to pay for itself and its maintenance, especially if it is a nice home in a desirable area.

A second home is also an investment in your future. Just like your primary home, it will gradually gain equity over time. Your goal may be to eventually move into your second home, perhaps when you retire. Depending on your circumstances, having that second home offers you a lot of choice. You can rent out your primary home, and if you've managed to pay off both of your mortgages, that's a nice little income for you. Or, you can sell your primary home and use the income to either pay off your second home or to retire on if you've already paid off both homes. Or, you can sell both and buy something that better suits your needs at that time. No matter what you do, you'll have twice as many choices with a second home as you did owning one.

If you are wanting a second home for vacation purposes, but just can't afford to fully own another home, consider time-shares or fractional ownership options. Time-shares are often condos or apartments, but could be cabins as well. These are often owned by a resort company, and leased in a way that allows each leaser a set amount of time in the home at a set time of year. Similarly, fractional ownership is when you own a share of a home or condo. A contract is drafted outlining use and payment arrangements, and the share is deeded in your name. Just like in full second-home ownership, a property manager helps to take care of the details in a fractional ownership situation. In fact, a manager may be even more important in the case of fractional ownership, because a manager is a third party and not a co-owner, so no personal issues can enter into the situation, and no one can claim to be doing an unfair percentage of the work of managing the home.

What Is A Secondment And What Are The Benefits?

A secondment is where an employee temporarily changes job roles within the same company or transfers to another organisation for an agreed period of time. Secondments can be to organisations within the private or public sector, or to a non profit making organisation, such as a charity or government body, and usually last between 3 to 24 months.

Secondments within an external organisation can range from management staff being seconded to an external company to give them experience of managing a different organisation, to technical staff taking secondments with suppliers or customers to gain experience of the supply chain.

Secondments benefit all parties involved; the employee, the employer and the host organisation.

Employees benefit from taking secondments as they are an excellent way to explore different career possibilities without them leaving their current job. They are a valuable way of offering employees professional development and career opportunities, especially within flat organisational structures where promotion may be limited.

Professional placements give employees the opportunity of acquiring new skills whilst continuing their employment with the same organisation. Secondees often acquire valuable experiences whilst on placement and generally gain a broader outlook.

Taking a secondment also demonstrates an employees flexibility and adaptability, both of which are desirable qualities to future employers. Most importantly secondments give employees the opportunity to improve their career possibilities by developing their CVs.

Employers benefit from allowing employees to take secondments in many ways. Employees that have taken a secondment acquire transferable skills and knowledge that they can put into practice once they return to their original position. These skills can then be communicated across the team and other departments within the organisation to improve and enhance the skill set of other staff.

Secondments also give the organisation the opportunity to build a wider network if the secondment is taken in an external company.

Host organisations also benefit where the employee is taking a secondment in an external organisation. The main benefit to them is that they gain assistance with projects, usually from skilled personnel. They also get an external perspective and transferable skills from the secondee, which can be beneficial for the project and the organisation.

If you are an employee interested in taking a secondment outside of your current company, there are many organisations that offer such schemes. Organisations often advertise secondment positions on their company website. The internet is therefore an excellent source to find information about suitable opportunities.

Bring the Magnificence of the Past to Set Trends Through Second Hand Doors

Time changes fast and so do the needs. The constant changing needs pave way to trends, which easily take over the common conscience of people everywhere. People keep exploring items to bring the best look to their home decoration, as nothing less than the best is the norm of the current time. Second hand doors have taken over the thoughts globally, as the constant exploration to achieve something new and the best have prompted people to look back into the history. 

Second hand doors are not hard to get these days and a connection with the past could easily be made by just walking up to any second hand building materials centre. Second hand doors let one to sense the history around, as they are the used stuff and command fairly high prices for their antiquity. Second hand doors feature among the recycled furniture for being used again and again. Second hand windows are also in great demand, as they also fetch an exclusive and charming look to your home, besides making it an endearing one. 

Antiques items are liked for their historical worth and such items also endow the users with a satisfaction to relish history along with modernity. Second hand doors or second hand windows are rated as prized possessions for their distinct carvings, designs, shades and quality materials. These recycled furniture get sold like a hot cake from your nearest second hand building centre. 

With the surge in demand for second hand doors or recycled furniture, second hand building centres are placing the needy ones in options by offering French type and sliding type. Those who adore beauty and wish to endow a dazzling touch to their home decoration, now can also opt for second hand doors on the basis of the timber used. 

Second hand doors in Cedar, Kauri, Oregon and Australian Hardwoods are the trendy options these days. Second hand doors with plain, stained glass and leadlight frosted are adored and bought by a vast number of beauty lovers across the globe. Second hand windows with Hopper, casement, fixed and double hung bring home the relishing experience of an opulent past in the extravagant modernity. 

Second hand timber gets used to get over a range of purposes in the home décor like stairs, skirting, flooring, kitchen bench and table tops. To give a face-lift to your home decoration, it takes just a common sense to make the best out of your second hand timber.

Lessons Learned From Second Life

Virtual worlds give participants an opportunity to be whoever they want, wish or hope to be. With a custom designed "avatar," you can look, behave and speak any way you want. It's your "second life," after all.

Brands, however, don't have that luxury. They bring established reputations and perceptions into a realm where everything is new and anything goes.

The "Wild West" nature of virtual worlds frightens brand managers schooled in carefully crafted and controlled messages, and Second Life indeed chased many away.

But with technology -- and especially social media -- becoming more and more pervasive in consumers' lives, virtual worlds will get a second chance. Here's how to capitalize on it.

Second Life and other virtual worlds have enormous branding opportunities. In terms of social media, virtual worlds really are communities in the most literal sense, and it is the level of interaction and engagement that creates such a strong platform for branding. Some brands (like Vodaphone) have found ways to develop interactive spaces in world that intrigue and engage prospective customers. For these brands, virtual world marketing is much like participating in a sponsorship: the presence is valuable if there's a good fit between the space, the target market and the brand -- and if the brand can find a way to add value for those visiting the space.

For some brands, though, virtual worlds are not the most friendly of communities. They may find that other forms of social media marketing are better suited -- or at least simpler to manage (particularly if the virtual world in question is Second Life)!  Here are a few factors that can help you understand "why" . . .  or "why not."

Ease of Use
Second Life is complex and user-unfriendly. Time magazine called it a case of Fortune 500 companies trying too hard to be hip. A recent report from Forrester suggests that marketing in virtual worlds is still too complex for broad adoption as a business strategy, but that this is likely to change in the next five years. Complexity is an issue, not only from the marketer's perspective, but also from the consumer perspective. It is one of the primary characteristics that can slow the rate of adoption for innovators. Some virtual worlds are easier to learn than others; Second Life is likely the most difficult to learn.

Software Requirements
Second Life, and some other virtual worlds, requires users to install its software. Software installation could be a deterrent to growth beyond the innovators and early adopters already a part of the virtual world phenomenon.

Number of Active Members
Second Life, for example, does not have the reach that other online advertising venues garner. Despite the claim of millions of residents (with continual growth), under a million are active and engaged.

Opportunities for Negative Response
Residents of Second Life are known to dislike and distrust big brand promotion. "Griefing," vandalizing and harassing in world, is a common problem for brands. Linden Labs takes a hands-off approach to managing griefer attacks, relying instead on resident governance. How bad can griefing be? A helicopter crashed into a Nissan building, starting a fire that left a couple of dead bodies, and American Apparel customers were attacked by members of the Second Life Liberation Army armed with virtual guns. 

Accuracy of Results Reporting
Second Life offers publicity and the value of free media impressions as social and other media cover new developments. However, no distinction is made between positive coverage and negative coverage.  When the media attention is negative, such as reporting attacks on customers, the publicity does not build brand equity.

User Security
Aside from the security from griefers, Second Life has struggled to provide security to the real life people behind the avatars. In 2006, hackers obtained credit card information for some residents.

User Capacity
Second Life's infrastructure limits the capacity at some events. Your brand might do a phenomenal job of planning and executing a relevant brand experience with an outpouring of enthusiasm, only to find the system crashes when more than 70 avatars are present at a time.

Number of User Interactions
Of course, capacity concerns are only an issue if things go well. Spend some time walking or flying around Second Life. It is filled with exquisitely detailed representations of real and fantasy locations. Yet seeing other avatars is rare unless one is spending time earning free Linden $ (the currency of Second Life) at Money Island.

Tie-In to Real World Sales
Some brands have sold digital versions of their products. Toyota, Reebok, Adidas, and Dell are all examples. No brand has yet announced success at using the in world branding site as a direct response tool for real world sales. Bob Tedeschi, in his article entitled "Awaiting Real Sales from Virtual Shoppers," explains that brands experience little measurable influence on real world sales that can be tracked to virtual branding efforts.

Number of Media Outlets
There are still a limited number of Second Life media outlets and advertising opportunities (beyond supporting retail space, experiential facilities, and events). NPR and Reuters are there, along with the AvaStar newspaper, but for brands accustomed to buying ad space in hundreds of television networks, consumer and trade magazines, and national, regional, and local newspapers, this is not a rich media landscape. Ad inventory will develop over time. A "MetaAdverse" network has been established to provide in-world billboard advertising.

Scalable Branding Initiatives
It is difficult to gain economies of scale in branding initiatives. One cannot lower the average costs of products by making mass amounts of products, and there are no huge media buys to lower the costs of advertising.

Design Costs
There are expenses to brand building in Second Life. Linden Labs sells land and then requires ongoing maintenance fees. Those are minimal compared to the design expenses brands encounter. Alex Veiga points out that brand building requires artists, designers, writers, and marketers to develop all aspects of the brand's identity in Second Life. Scion City, a Toyota initiative, took about 10 weeks and probably cost in the range of $100,000. Importantly, brands that enter Second Life must be committed to operating there. It does no good (and in fact could harm a brand) to have a presence there that is not manned, managed, and leveraged towards accomplishing the brand's objectives.

In open worlds, economies are free markets. Brands are welcome to compete and the spoils go to the brands with the best strategy, the best targeting and the best engagement propositions for their target audiences (mindful, of course, to ensure the strategy is suitable for the virtual culture in question). The brands with the wherewithal to strategically plan a social media marketing campaign will also know to commit to the campaign and to provide ample time for the strategy to work prior to making judgments of success or failure and redirecting resources to other marketing executions.

In other words, they'll understand and capitalize on why . . . or why not.


©2008 Dr. Tracy L. Tuten

Second Mortgage: How do you even qualify?

When you think about a second mortgage, what do you think of first? Which aspects of a second mortgage are important, which are essential, and which ones can you take or leave? You be the judge.

Great news! You qualify for a second mortgage. Now what would you like to do with the second mortgage? It will be your answer to this question that determines whether or not your second mortgage is your friend, or your foe. That seems to be an awfully strange way to look in a second mortgage; however that's exactly what the mortgage will be. Your friend or your foe.

How do you even qualify for a second mortgage, what is a second mortgage, and why would you want a second mortgage? Well, the answers here are as varied as the consumers who apply for such mortgages. Many times consumers need a second mortgage to make improvements on their home. Many times consumers need a second mortgage to put their child to college. And sometimes, consumers need a second mortgage to start a business. The reasons given here for obtaining a second mortgage increase the value of the home, provide opportunity as an investment in your child's future, or provide the opportunity to increase income. These are the original and most beneficial reasons for obtaining a second mortgage.

Are they the only reasons consumers obtain second mortgages? No. Today's market has been a great influx of second mortgages to pay off credit card debt, to buy new car, or to simply take a vacation. Should consumers receive a second mortgage for those reasons? Absolutely. Should consumers actually ask for a second mortgage for those reasons? Absolutely not.

If you find yourself confused by what you've read to this point, don't despair. Everything should be crystal clear by the time you finish.

An educated consumer understands the consequence of a second mortgage. The educated consumer understands the price of the second mortgage. What is the price of the second mortgage? The equity in your home. When you apply for a second mortgage, you're trading the equity in your home for cash. You're giving up your savings.

If you're trading your savings, in order take a step up, you've made the right decision. If you're trading your savings for a frivolous expense, you've made the wrong decision. That's how you determine if your second mortgage is your friend or your foe.

Today's consumer is acquiring second mortgages that for many will prove to be their foe. They're not increasing the value of the home; they're not educating their children. Nor are they increasing their income earning potential, they're simply spending their savings. Rising real estate prices, increasing availability of mortgage products, and the decline of savings for the public as a whole is creating the "bubble" effect. The bubble effect occurs when prices rise, spending rises, at a rate greater than can be supported on a long-term basis. At some point, the bubble bursts.

Your second mortgage, if used to increase the value of your home, will have insulated you against the drop in price. Your home is actually worth more; therefore, if prices drop you're protected. This was the original intent of the second mortgage; to provide the consumer with easy access to the savings accumulated in their home for home improvements, emergency events, or in order to better their homes or lives. You know for the most part consumers do not save money in a savings account; consumers only save money when they aren't aware that they're saving money. Home equity was one of the last hidden ways consumers were saving. Second mortgages and other loan mortgage products have managed to eliminate those savings as well. Has the consumer stop to contemplate the consequence of negative saving? Absolutely not, and our current system of mortgage lending encourages negative savings.

There's a lot to understand about a second mortgage. We were able to provide you with some of the facts above, but there is still plenty more to read about in in our article directory.

Second Mortgage Can Offer Fast Cash, Piece Of Mind

If used properly, there may not be a more effective financial option a homeowner can exercise than to take a second mortgage on their property. More and more American consumers have become aware of revolving debt and the implications it can have on them and their loved one - not just now but in the future.

Second mortgages can be used for practically anything, but they are most typically pay for outstanding education expenses, repairs of your home or property, to procure higher value real estate, and to pay off high interest rate credit cards as well as to consolidate or eliminate other debts.

Naturally, it wouldn't be fiscally sound to take out a second mortgage if it would not be in your best interest as a homeowner. With so many refinancing, borrowing, and other transaction options available to the modern consumer, when is taking out a second mortgage the right way to go? A second mortgage is a good choice for the homeowner who has a need for a substantial amount of cash and also has sufficient equity in a home.

Essentially, a second mortgage is a second lien against the value of the property, one which is paid back in monthly installments exactly the same as was the case with your first mortgage. Unlike the interest on unsecured loans and credit cards, second mortgage interest is generally tax deductible, and is therefore a viable solution to rid yourself of high interest rates which is often associated with other forms of debt.

An often overlooked nuance of obtaining a second mortgage is the very same due process which was involved in the first. All too often homeowners will take out seconds from the same financial institution used to obtain the initial mortgage. This stands to reason, as the mere thought of mortgaging your home once is overwhelming enough for a surprising amount of individuals who might otherwise benefit from the act to avoid it altogether. A second mortgage, though, is a very important financial decision (just as, if not more important than the first) and should be treated with the same diligence and research as the first. Obtaining information through several lenders or brokers on the second mortgage regarding residential mortgage loans such as; how much can you afford, as well as ascertaining how much of a down payment you will need, and find out all the costs involved in the loan is as vital to the process the second time around as it is the first. Simply seeing the monthly payment or the interest rate on the lien itself is not enough. Knowing information about the same loan amount, loan term, and type of loan will allow you to compare the information from each lender and broker.

Do your homework; get a hold of the current mortgage rates and understand whether the rates are being quoted the lowest for that day or week. Question whether the rate is fixed or adjustable, keeping in mind all the while that interest rates for adjustable-rate loans go up, which will also make the monthly payment go up. If the rate is quoted for an adjustable-rate loan, determine how your rate payment will vary. Again, these factors are as important during the process of obtaining a second mortgage as they are during the first.

You might find that in considering a second mortgage, your financial situation would also lend itself to potentially refinancing a portion or even all of your existing debt. While serving essentially the same purpose as a refinance, a second mortgage can oftentimes be a more efficient and, ultimately inexpensive consolidation option. Of first and foremost concern to most with enough debt to consider a second mortgage on their home to pay off debt, a second mortgage enables you to eliminate high interest debt much more quickly than would be possible with a refinance alone.

The principle advantage of taking a second mortgage is its ability to allow the accomplishment of a specific goal, including but not limited to a reduction in the amount of interest being paid on credit cards (the principle reason homeowners choose a second mortgage as their most effective and efficient consolidation option). If the lien has a shorter pay-off term, the homeowner can look forward to one payment when the second mortgage is paid off. Once the decision is made that the goal is worth the investment, homeowners should shop for the right second mortgage lender, making sure that the one they select is reputable, responsive to their specific needs, and willing to discuss all of the costs up front. Keep in mind that these decisions have serious implications on your credit and foreseeable financial future. If your payments remain regular you'll alleviate most of the interest rates pertaining to the loan and raise your credit rating.

Unfortunately, second mortgages are far from federalized; they vary widely from state to state and private institution to institution. Nearly as important to performing regular due diligence in observing and researching companies which you might do business with in obtaining a second mortgage is to ascertain the nature of state laws which may or may not limit the capabilities and rights you have as a consumer. In some states, for example, second mortgages do not require borrowers to have equity in their home and many new loans are available up to 125% of value of the security in question (of your home). Many consumers have also found these loans useful for paying off their bills, making home improvements, and taking out funds from the loan for personal use. In other areas, such policies are not possible. Ignorance of a state's laws or financial regulations may not be used as an excuse and will not protect you from excessive obligations or pitfalls which may result from problems which arise down the road.

A second mortgage is more often than not the best option available for homeowners with large amounts of unsecured debt. Realizing the nuances of the mortgage process can not only help you to evade some of the problems you may have encountered during acquiring your first mortgage, but use the process to benefit you financially in the long run.

Looking For A Second Mortgage Loan?

A second mortgage loan is a subsequent loan and subordinate to the earlier mortgage. In other words, a second mortgage loan is used as collateral pledged for the first loan.

Length of Second Mortgage Loans

Second mortgage loans have varying lengths with which they are eventually paid off. Some second mortgage loans may last for as long as 15 or 20 years. Other second mortgage loans only require one year for repayment.

When you're thinking of taking on a second mortgage loan, you will need to know what term best suits you. Discuss the repayment terms of the second mortgage loan with your bank or lending company. For instance, you get a second mortgage loan worth $20,000 to make some home repairs. With this amount, you might want to take on a second mortgage loan that will allow you to repay the entire amount in one or two years. If you pay a second mortgage loan that has a shorter term, the monthly payments may be too high.

Payment Calculations for Second Mortgage Loans

Before taking on second mortgage loan, be sure that you understand a couple of things first. Know how much your monthly payments will be for that second mortgage loan. Moreover, it is also helpful if you also have an idea as to where those second mortgage loan payments will cover.

Some second mortgage loans require you to make monthly payments on both interest and principal. Other second mortgage loans only require you to pay the interest of the borrowed amount.

The former type of second mortgage loans will allow you to significantly shorten your payoff period since with each payment you make, you are also chipping away at the principal. With the interest-only second mortgage loan however you will be required to pay back the entire amount that you borrowed as soon as the term ends. This type of second mortgage loan is also called balloon payment loans.

Second Mortgage Loan Costs

Fees may be charged by some lending companies for the money you borrow on second mortgage loans. The fees, referred to as "points," are usually a percentage of the second mortgage loan. One point on your second mortgage loan is equivalent to one percent of the amount you borrow.

So, if you were to get a second mortgage loan of $10,000 with an eight-point fee, then you would have to pay $800 in "points." Second mortgage loan companies may charge you in varying number of points so if it might be helpful if you do a comparison first.

Second Mortgage Loan Rates

Second mortgage loans have different payments plans. Most second mortgage loans have a fixed rate payment included in their payment plans. If you have a fixed rate second mortgage loan, the interest rate will be set for the whole loan term. This means that your monthly payments for your second mortgage loan will not be affected by any outside changes.

Some companies also offer second mortgage loans with variable rate payments. These variable rate second mortgage loans periodically experience rate adjustments. A variable rate second mortgage loan might be cheaper than a fixed rate payment in the long run. But this is only provided if the interest rates of second mortgage loans go down. If interest rates rise, then your monthly payments for your second mortgage loan will rise as well.

Understanding A Second Mortgage

If you're in need of additional funds and you own a home, you may have the opportunity to borrow against your home through a second mortgage.

A second mortgage is another name for a home equity loan. The amount that can be borrowed on a second mortgage is typically based on the difference between your home's current value and your original mortgage principal. This type of loan utilizes your home's equity to provide you funds for home repairs, school tuition, debt consolidation and other financial needs. For example, if you have a child who's about to go away to college and you need money for the tuition, a second mortgage can you help you afford your child's education. If you want to make home repairs or renovate your home, a second mortgage can supply you the funds you need to get the job done. It's a good way to tap the asset value of your home to meet your investment and budget needs, and helps you avoid incurring high interest unsecured debt like credit cards.

Second Mortgage Benefits
There are some innate benefits to a second mortgage. First of all, since a second mortgage is based on your home's equity, as a home owner, you have the funds readily available. A second mortgage is a secured loan and is generally easier to obtain than other types of loans.

Also, the interest paid on a second mortgage is normally tax deductible. Not all loan interest can be deducted from your annual taxes. With a second mortgage you can easily deduct the interest you pay on your second mortgage from your taxes.

Second Mortgage Disadvantages
There are some disadvantages associated with a second mortgage that you need to be aware of. For starters, since the second mortgage is being based on your home's equity, you are putting your home on the line. If you default on payments, the bank can take away your home. Also, interest rates can be higher than a first mortgage, especially if you have a low credit score. A low credit score always affects the interest rate of your loan and the amount that you can borrow.

How to Get a Second Mortgage
If you've determined that a second mortgage is the answer to your financial needs, you need to do a few things. You need to make certain that the reason why you're getting a second mortgage is worth borrowing against your home. For example, if the only reason you're getting a second mortgage is to purchase a new motorcycle, and you already have two, you need to think if the end result is worth taking out a second mortgage. Also, you need to get your home appraised. A home appraisal will establish the current market value of your home and be the value used to determine the details of your second mortgage. After the appraisal, you need to find a lender. Check with the lender who you used for your first mortgage to see if they're a good source for a second mortgage. Also look online for second mortgage lenders and resources. You never know where you'll find the best rate on a second mortgage. And finally, after you've compared lenders and made the decision that a second mortgage is the best choice, pick your lender and keep up with your payments. Remember, since you're borrowing against your home with a second mortgage, you are putting your home on the line.

A second mortgage is a sensible solution to acquiring funds for school tuition, home repairs and renovations, and even vacations and cars. But before you run out and get a second mortgage, you need to weigh the benefits and disadvantages of a second mortgage, and determine if the reason for getting one is worth borrowing against your home.

How To Find The Best Home Equity Loan Rates

There is certainly no shortage of home equity loan companies on the market today. You only need to turn on your TV to understand what I mean. Every bank credit union and financial institution offers home equity loans to their customers. That's great buy how do you find the best home equity loan rates that are the best for you and your situationThere is no quick way to find the best rates without taking a little time and doing some research but the good news is that by doing this you'll find the