Can you believe it?? Standalone seconds are back on the market! Standalone seconds were widely popular and offered several advantages over other types of financing. When the housing bubble burst, lenders stopped offering these second mortgages. Well they are back, and available to qualified buyers and homeowners!
Standalone seconds are a valuable tool and depending on your personal financial situation, one that may greatly benefit you. Here’s what you need to know before you apply for a home equity line of credit (HELOC).
Important Second Mortgage Facts:
- A second mortgage takes a backseat to your first mortgage.
- The process is similar to a first mortgage. Just like your first mortgage, you will need to complete the application process, your credit and income must qualify as well as obtain an appraisal.
- There are fees involved. You are getting an entirely new mortgage and some fees will apply including lender, appraisal and/or title fees.
- Having a second mortgage means you have two sets of payments to make every month instead of one.
Top Uses and Benefits for HELOCs:
- Purchase loans for borrowers with less than 20% down, who do not want mortgage insurance.
- You can pay off an existing high balance loan with a new high balance first and HELOC.
- Obtain cash out or use it as a tool for debt consolidation purposes.
- Get completive jumbo pricing when you combine a high balance first plus a HELOC.
- Refinance to get out of an existing FHA loan.
- Replace an existing HELOC nearing end of the interest only “draw period” instead of waiting for a subordination.
- If your property appraisers below 80%, you can obtain a second instead of mortgage insurance.
Guidelines for Helocs:
- OWNER OCCUPIED ONLY– no second homes or non-owner (investment) properties.
- No non-occupant co-borrowers.
- Single family homes, condos and O/O duplexes OK. No triplexes or fourplexes.
- No I/O’s –OK behind amortized ARMS –TCF qualifies at First Lender’s Qualifying Rate.
- Cannot have more than 6 “non subject” properties – financed or free and clear.
- Max 89.99% CLTV -Combined liens of $750,000 or less.
- Max 85.00% CLTV - Combined liens to $1,275,000 !!!
Based on your specific needs, a second mortgage may be a wise financial move. If any of these situations sound familiar, or you would like to learn more, please contact me, Garrick Werdmuller at 510.282.5456 or email me at firstname.lastname@example.org.