When is getting a Second Mortgage the best option for you?

Reblogger Indera Coggins
Real Estate Agent with Re/Max 100
https://activerain.com/droplet/48K

When is getting a Second Mortgage the best option for you?

This is a great educational blog post from David. I sure will pass this information along to my buyers and sellers.

Thought I would re-blog.

Original content by David Krichmar NMLS #293883

When getting a mortgage you will want to know all your options?  And of course you want to make sure you are choosing the best mortgage for your needs.  Many times I hear that other banks do not offer 2nd mortgages of that they do not exist.  I am here to say they do exist and to explain when getting a 2nd mortgage could be best for you. 

Jumbo Loan

A jumbo loan is considered any conventional loan with a loan amount over $417k.  So what do you do if you loan amount is over $417k?  You could get a Jumbo mortgage, but the rate for a Jumbo Mortgage is usually .75% to 1% higher then a normal loan.  But if your total loan amount is small enough you can split the loan into 2 loans.  You can keep the first loan at $417k and get a 2nd mortgage for the difference.  As an example, you have a $500,000 loan.  Your rate could be 6% on a Jumbo loan.  Or your could do 2 loans, one at $417k and a 2nd mortgage of $83k with a rate of 7.5%.  The option of 2 mortgages would save you about $180 a month. 

Waiving your Escrow account

Waiving your escrow account means to not include your taxes and insurance in your payment.  The only way to do this is to put a down payment of 20% or have 20%+ equity in your home if you are refinancing.  Or you could use a 2nd mortgage to make up that 20%.  As an example, your home is worth $200k and you need a new loan of $190k.  based on this you would need to include your taxes and insurance in your payment.  Or.... You could do a first mortgage of $160,000(80%) and a second mortgage of $30,000.  This would allow you to not include your taxes and insurance in your payment

Mortgage Insurance is Not Tax Deductible for You

If you make over $109,000 a year, mortgage insurance is not tax deductible for you.  But if you get a conventional loan for more then 80% loan to value(less then 20% down payment), you will have it.  Unless you get two loans.  Another example, you only want to put a 5% down payment.  So you would want to do a first mortgage for 80% of the sales price and a second mortgage for 15% of the sales price. 

A Lower Payment 

Some times getting a 2nd mortgage will allow you to get a lower payment.  Just like our example under "Jumbo Loans".  But you can also save on  your monthly payment if you are not getting a Jumbo loan.  Let's say you are buying a home of $200k with a 5% down payment.  If you chose to get one loan with mortgage insurance your payment would be about $88 higher then a mortgage option of two loans.

Keep in mind 2nd mortgages are not for everyone.  You have to have great credit(680+).  They expect you to have money in the bank for reserves and there may be other requirements.  A rate on a 2nd mortgage can be from 6.99% to 9%.  And the min loan amount is $10k to a max of $100k(sometimes higher).  Our home is our biggest asset, make sure you are getting the best mortgage for that home.  Whether you are buying a new home or refinancing that home, call me today to make sure you are getting the best mortgage possible.   

 

 

 

David Krichmar 

Mortgage Banker/Broker

Schmidt Mortgage Company

Office:832-689-6012

David.Krichmar@gmail.com

www.DaveYourMortgageGuy.com

For More Mortgage Info Follow me at  Dave's Blog

If you are looking for a mortgage in Fort Bend County, Sugar Land, Houston, Katy, Harris County, Brazoria County, Pearland, The Woodlands, Montgomery County or anywhere in Texas I am your GUY!

NMLS#:293883

 

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Rainer
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Brad Hornshaw
Brad Hornshaw Realtor Lynnwood, Bothell, Everett - Lynnwood, WA
Realtor, Listing Agent, Buyers Agent, Investments
Hi Indera This is very good info, I think the general public is even more uninformed on finance than Real Estate transactions I know I am........Brad
Jan 17, 2011 07:33 AM #1
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Rainer
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Indera Coggins

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