Second Mortgages Are On The Rise Again

George, things always come and go in cycles.  We haven't given second mortgages much thought lately except maybe when we had to deal with them in the case of short sales.

Thanks for the interesting stats. That's a huge increase. 

George, I don't think this is good for anyone. It only serves the big bad banks that are making the loans.  Using the equity in one's home like an ATM is a sure formula to contribute to financial disaster.

Hello George,

I love the comparison to the Chinese meal as 2nd mortgages are both sweet and sour!

I would like like to see these types of products again.  I am afraid there will be more sour than sweet.

George, We are going to get a HELOC on our new home and I was surprised how easy it is going to be. They will be paying all the closing costs too. I guess they do taht for everyone.

George Souto , for the time being, 'sweet' part is good.

Sour? Time will tell.

We all know what happened when the equity on homes became a reason for people to buy luxury cars and flat screen TVs - or homes were just plain ATM machines then!

That's a lot of debt to be carrying. Those who are still in their homes but underwater are facing balloon payments due on their second liens in the next few years. It's doubtful they will have the equity to refinance. 

hey there GEORGE SOUTO,

that's good news, thanks for sharing!

have a great fay!

Good morning George. Second mortgages, especially home equity loans can be a mixed blessing, but used property is a great opportunity for homeowners to manage financial obligations. In many cases to interest can be deductible, the trick is to pay off the obligation as soon as possible.

George, this is so true, most of the listings this year have all had a 2nd mortgage and very little equity.   

As long as they have equity many people will use their home as an ATM to fund living expenses, college tuition or improvements. 

Once they are maxed out and then have to sell, they are upset when the house is not worth the sum of the payoff figures, commissions, repairs and selling expenses.

George, I cannot see that taking place in our area any time soon as so many are being cautious or underwater with their homes

I just can't get around a sneaky feeling, a memory that haunts; I'm just not sure this is a good thing.  In some cases, yes, a 2nd makes all the sense in the world. 

But recent history shows us that this is too alluring and can be misused.

And yes...I can easily see this will be happening in the Washington, DC area.

Not seeing those values in Florida to justify seconds. Not yet anyway. We're on the incline.

George,

I haven't seen a short sale in my area in a very long time - thank God! But those 2nd lien mortgage lenders holding people hostage always was a nightmare. Thanks for the great information!!!

Hi George: Overall, I don't have a positive feeling for this development. Second mortgage, although it shows and proves that the property values are rising, is an invitation to sink deeper into debt even if the money is used to pay off revolving credits, etc.

George --  The HELOCs are just too easy to get, in my opinion. If used responsibly, they're good to have. However, irresponsibility is what got most homeowners into trouble using those $$$ for new cars, vacations, etc.

George... we started seeing these make a return in Charlotte, as well. HELOCs just about disappeared for a while, but they've made a come back here in the past year.

Well, I thought if I kept mine long enough it would come back in style! LOL!