Ashley Munson asked:




If you find yourself in a financial bind are looking for 2nd mortgage loan modification, then take heart because you are not alone. There are millions of people who got second mortgages during the ‘boom’ years and are now finding it difficult to maintaining their payments. In this article I’ll outline 3 tips that you can apply today in getting a modifying loan for a second mortgage.

Before I go into the strategy I should let you know that if your first mortgage is not in good shape, i.e. payments are not being made, then you might have difficulty getting a modification on the second. Ok, with that out the way lets talk about that second mortgage…

Best Modification Scheme

The Obama administration unveiled it’s flagship program for helping millions of Americans save their mortgages with the Home Affordable Modification Program or HAMP for short. The program involves modifying the existing mortgage arrangements and facilitating lower monthly payments, reduced interest rates, and extensions of the life of the mortgage.

Qualification under the scheme is means tested but at minimum you have to meet what is called the income/debt ratio guideline. The guideline stipulates that your monthly mortgage repayment must exceed 31% of your gross monthly income in order to qualify for loan modification assistance. You also must be in a position to meet the new restructured repayments.

Best Approach to Getting Approved

You are able to make an application on your own, but the success rate on self-made applications is a dismal 20 – 30%. Naturally, if you are facing foreclosure or simply can’t keep up with your monthly payments, it’s in your best interest to get the best help and advice you can muster. By far the most effective way to go about submitting an application is through a loan modification company. These companies specialize in 2nd mortgage loan modification and are always willing to give the soundest advice possible. On top of that, they also help with drafting the dreaded hardship letter, which is key component of your application.

So, there you have it. All the information you really need on 2nd mortgage loan modification and more importantly, sound advice on what the best approach should be for you moving forward. Use the advice given well, get a online loan modification company to help you and enjoy the peace of mind attached to saving your home from foreclosure. Be bold and take action.

Frederick

Harris Fallon asked:




A 2nd mortgage loan allows a homeowner access to the equity in his home. This is the appraised value of the property less the amount of the first mortgage. Traditionally, second mortgage loans were used to finance improvements.

Homeowners might remodel the kitchen, add a deck or finished the basement to provide a family room or home theater. The equity was used to send students to college or to provide startup capital for a small business. The second loan for most homeowners was a one-time loan meant to cover a specific purpose.

Twenty years ago only the most credit worthy individuals could qualify for a second mortgage that, when added to the first mortgage, would total more than 80% of a home’s value. When mortgage interest rates declined in the early 2000s, second mortgages became more common. A contributing factor was the housing bubble that caused home prices to rise by double digits annually in many parts of the country.

Large financial institutions began to ease the underwriting restrictions on second mortgages in the 1990′s and by 2001 a homeowner could leverage 100% of the value of his home with a second mortgage loan. The low interest rates were attractive to homeowners. It has been common for those living above their means to consolidate their debt with a second mortgage on their home by refinancing the second mortgage year after year.

In the past, a 2nd mortgage could be expected to be at a higher rate of interest than the first mortgage on a property. Variable rate second mortgage liens were offered with initial interest rates as low as 3%. Some homeowners began to use the equity in their home as a mini-bank. They would take a 10 year second mortgage to pay off credit card debt and their monthly payments on the new loan would be substantially less than the payments made on the high interest credit cards.

However, it is important to realize that when you take a second mortgage loan on your personal residence, you are in a position of increased risk. Almost all second mortgage loans have a cross default policy. That means failure to pay the second loan will cause the first mortgage to go into default and you may lose the home through foreclosure. In the current economy, the rapid decline in home values has meant thousands of homeowners now have first and second mortgages that are much higher than the market value of their home.

Equity in your home is like have emergency cash in a bank account. Homeowners who treat the cash generated by such a loan as an excuse for a shopping spree may find themselves struggling to keep their home. Used wisely, a second mortgage loan is an option available to pay for medical expenses, college tuition, or to improve your property. Used unwisely, homeowners may find themselves facing the loss of their home altogether. As such, you should weigh the extra cash that you generate with the extra risk you will take on before deciding to take on a second mortgage for your home.

Ron

Richard Pettinger asked:




Rising house prices in the UK (and other countries) have made it very difficult for first time buyers in the UK. The ratio of house price to earnings has risen significantly. With average house prices rising to over

Katharine Norman asked:




Mortgage refinancing can make good sense if you want to make improvements on the house, pay those college fees, or pay-down higher-interest loans. As property prices have gone up and up, homeowners often find they have more equity than they ever dreamed of when they first bought. Richard Syron, CEO and Chairman of the Federal Home Loan Mortgage Corporation — or ‘Freddie Mac’ — says “more than a dozen years of sustained growth in housing prices have turned many middle class homeowners into millionaires; put countless children through college; and made the family home the most valuable egg in the American nest”. Maybe we can’t all be millionaires but, even so, “for the typical family, home equity accounts for the bulk of their wealth,” agrees Frank Nothaft, chief economist at Freddie Mac.

It all looks good, so far. But now that you’ve started to look for that home equity loan — most likely a fixed-term second mortgage, or a line of credit — maybe you’re starting to wonder why home equity rates are generally higher than all those great first mortgage packages?
There are quite a few reasons. For a start, you’re comparing apples and oranges –they’re different breeds of loan, and the interest rates reflect the different features offered by each. But how, exactly, are those interest rates set? Frank Nothaft explains that “home equity loans are typically linked to the prime rate … many home equity loans have rates that are 1 percent or more above the prime rate” and, by comparison, “most 30-year first mortgages are typically below prime”. The interest rate for a typical home equity loan needs to take several factors into account: the risks to the lender, the duration of the loan, the flexibility offered to the borrower, and the amount of the loan in relation to the amount of equity available (referred to as the Loan to Value (LTV).

The first mortgage, of whatever kind, is just that — it’s the first lien on your property, and the first in line if you default on your loans. When you got your first mortgage you put your home up as collateral against the loan. If you can’t make the payments, the mortgage company can proceed with a collection action — in a worst-case scenario, you lose the house to pay off the loan. And, because it’s the primary loan, your first mortgage has priority in any collection action. Essentially, the mortgage company is confident that they’ll get their money back if you default. For a second mortgage, the situation’s different: whether it’s a conventional repayment mortgage or a line of credit (or any other kind of loan), it’s second in line if things go wrong. So that’s a bit more of a risk to the mortgage company, particularly if the value of your house depreciates, or you take out yet more loans.

And then there’s the time factor. The term, or duration, of a home equity loan is usually far less than that of a first mortgage. Most first mortgages are for a period of maybe 15, 20, or even 30 years. That’s because most people want to minimize their mortgage payments as much as possible, especially at the outset, and they’re in it for the long-haul. And, just think about it: while you’re making the payments, you’re paying interest, and you’re making the mortgage company money. You’re a good bet. That’s why, when it comes to first mortgages, companies compete with each other so aggressively to get your custom. And they pass that competition on to you, through lower interest rates.

A standard home equity loan is effectively a second mortgage, and can be a fixed or adjustable rate mortgage. The money is loaned in one lump sum, and payments are made over a pre-arranged duration — just like a first mortgage. But a home equity loan is typically for a short term, possibly only for a few years. Usually it’s for a specific purpose — home improvements, or paying of a debt — and the higher interest rate means most people prefer to pay it off as soon as they can, rather than mount up large amounts of interest. The mortgage company doesn’t have your custom for the long-haul, and it takes this into account when setting the interest rate.

Even so, this kind of mortgage can be far cheaper than the interest rates on credit cards or unsecured loans. As interest rates rise, pushed up by the Federal Reserve’s successive increases in the prime or ‘index’ rate, more and more borrowers are seeing the value of fixed-rate home equity options, in the 10-15 year range. Although these still have higher interest rates than first mortgages, homeowners have the best of both worlds: the comfort of knowing the rate won’t rise, and the ability to improve their quality of life by releasing the equity in their home.

With the other kind of home equity loan, the line of credit, you can draw cash whenever you want, up to your limit. When you pay money back, that credit is released again for you to use, immediately. In that sense it’s an “open account”, a bit like having a credit card, but with lower interest rates. This freedom to dip in and out of the loan can be a boon for the homeowner, who only pays interest on the amount owed, and nothing more — but it is more unpredictable, and less lucrative, for the mortgage company. So you pay that bit more for the flexibility of being able to use the loan as you wish, and that comes in the form of a higher interest rate.

But, given the ability to release your equity and use your wealth when and where you want, it can certainly pay to refinance. Don Taylor, of Bankrate.com, agrees, saying that a home equity loan, or a home equity line of credit (HELOC) can “allow you to restructure your debts or finance something that’s important to you,” and adds that both kinds of loan typically have much lower closing costs than a first mortgage.

Maurice

Joyce P asked:


We relocated and purchased our home about a year and 7 months ago in an area that was more expensive than we were coming from. The purchase price was $239,000, we put down $14,000, and took a home equity loan of $34,000 to finance the rest of the purchase price and to avoid PMI. I recently submitted a question about whether or not to start paying down the first mortgage or the home equity loan, and got great advice, but I am wondering now that my tax value of my home has increased in January from $200,000 to $279,000 due to reassessment, (I know it wouldn’t sell for that now because we recently had comparables done in January), would I save money by refinancing my first mortgage and adding in the home equity loan so the total amount has a lower interest rate? My husband thinks we have to wait 2 years before we can refinance, and I’m not sure about that, but that would be this July. My goal is to pay off our house as soon as possible.

Teresa

Peter C asked:


We have had a 30 year fixed mortgage for 5 years. Most of the payments made went to interest. If we refinance to a new company to a 15 year fixed rate mortgage (rates are low), would we get any sort of credit back from the first mortgage (since we’ve been paying interest payments mostly as-if we were going to have the loan for 30 years but now it’s going to be paid early? We’ve barely paid any of the principle in the past 5 years, so I’m wondering if we get any credit-back, so to speak… please advise.

Laurie

Walter Sigmore asked:


ne of the million who’s missed a few payments on a mortgage and want to avoid your loan going into default? The new federal mortgage loan modification plan can help those out who are in desperate need of a little assistance and get some necessary modifications on their mortgage loan so that it’s affordable again.

To have the ability to qualify for this modification plan you will need to have a first mortgage that is worth less than $729,500 that was completed and signed before the beginning of 2009.

When you are applying for a loan modification most people forget that they must live in the home at the time of application to have the chance of approval. If you do not live in the home the lenders will not see the point in giving you a loan modification as you are not currently residing there. Most people don’t realize this until they are applying for the loan modification and get turned down.

Alongside these two things you will also have to take the time to write out a hardship letter. They advise that you handwrite this piece as it’s more personalized and has a legal signature on the bottom. With this document you are explaining the entire situation as to why you are unable to make the necessary payments and how you plan on getting back on track.

This document could either make or break you when it comes to getting approved and if you don’t take the time to answer all the personal questions the lender may not consider you for a loan modification.

You don’t want to find yourself struggling drastically financially when there are many companies out there willing to help you. Your mortgage broker may have the opportunity for you to get a loan modification yet you’ve never inquired about it. All you need to do is ask your mortgage broker if they are offering such a thing and they may be able to assist you.

With the new federal mortgage modification plan you could find yourself getting out of the red zone in no time. When you are approved for this modification plan you can finally get your life back on track and finally have yourself stabilized financially. A mortgage loan modification can be quite useful for anyone needing to get out of a financial struggle.

Nicholas

no picture asked:


I bought a house six months ago. The price was 465,000. Anyways my real estate agent hooked me up with two mortgages. My first mortgage is fixed for 5 years and is interest only, i got it for 6.62% interest rate, my second mortgage is a balloon loan and i got that one at 9.15% interest rate. So i pay 2,031.39 for my first mortgage and 749.80 for my second mortgage. So do you think i got a good deal or my real estate agent screwed me over. I don’t know anything about real estate so any help or advise would be appreciated. Thank you.

Karen

John Elton asked:


There are many occasions in which you require large amount of money. The reason can be anything like maintaining your home, refurnishing the interior of the home or even for a holiday vacation on a good tourist location. Mostly you will not be having the required amount in your wallet to fulfill the dream. How can you arrange such a huge amount within a short period of time? The best way for getting such an amount is going for a second mortgage loan if you already own a house. These second mortgage loan works on the equity on your existing property.

The second mortgage loan amount purely depends on the equity of your home. Equity means the balance amount getting after subtracting the liability of the home from actual worth of it. A percentage of this amount will be disbursed as second mortgage loan. This loan takes the first mortgage loan as the collateral security. You may have to go for more insurance coverage if total mortgage loan exceeds the insured policy amount of your home.

Second mortgage loans in general have the same interest rate as that of the first mortgage loans. It is always better and comfortable to have the second mortgage loan in the same bank or lender from where the first mortgage loan was availed. If you have the first mortgage loan from a government agency, you have the option to take the second mortgage loan from a private lender as well. Second mortgage loans are very popular and all lending agencies have competition each other to issue second mortgage loan to the potential home owners. Some people have wrong impression that second motivates loans are highly expensive as they carry high interest rates. Second mortgage loans are not at all expensive than first mortgage loan, these loans are in all ways equivalent to first mortgage loans.

Nowadays getting second mortgage loans are very easy as many companies offer online facilities for registering with them. To claim a second mortgage loan in general, you require a good credit balance. Especially this is true for the case when you go with Government agencies like banks and other financial institutions. But there are many private lenders who are very much willing to offer second mortgage loans to those who do not have good credit balance or have only bad credit history.

To have a best deal on second mortgage loans you have to be little attentive. In the present day scenario, the online website of the lenders gives you all the required information about second mortgage loans within minutes. It is advisable to have the details of the second mortgage loan providers, their conditions and the interest rate they offer from their online website. You have to compare the interest rate between the companies and check whether they are having any hidden charges like processing charges, evaluation charges etc. Also make sure that you are entering in to a deal only with a reputed second mortgage loan offering company.



Juan