What is the difference in a first mortgage and a second mortgage? Title work on a house can be viewed as a title on a car. It doesn’t matter about the size of the loan. The only thing that counts is when the lien was filed on the home. All mortgages are date and time sensitive. Whatever date the liens are filed depends on if it is a first, second, third or even Fourth lien.
You can take out a Home equity line of credit, secured line of credit, HELOC, home improvements mortgage, a tax saver mortgage for a car or just a 2nd mortgage. These are all considered mortgages a deed of trust is filed against your home. This secures the loan with your home. These loans are great for upgrading and improving your home. They can also be used for consolidatiing debt or buying a car or boat or anything.
Home Equity Line of Credit
There are a couple different types of second home mortgage available. The HELOC, Home equity line of credit and the line of credit are typically adjustable rate mortgages. These mortgage rates will vary and are usually based on the prime rate of interest. You can borrow the full amount at once or you can take draws over a period of time. This can give you flexibility in paying back the loan. When you take more cash this is called a draw against the loan. This type of loan can be good when you need more time to complete a project or if you do not need all the money at once. You do want to look at locking this loan in once the work is completed.
The other type of 2nd mortgage is a closed end fixed mortgage. This type of loan is still using your home for security. If you want to consolidate and payoff credit cards you should use a fixed installment type mortgage. This way you know the loan will be paid in a specific time period and you may be able to deduct the interest on your taxes. You should always consult a tax expert.
If you have 20,000 in credit card debt your minimum payment will be around $600.00 per month and there is not a specified term to pay this off. It could take you 10 – 30 years or even never be paid.
If you borrowed $20,000 at an apr of 8.5% and paid a payment of $600.00 per month you could have this debt paid off in just over 3 years. The amount of interest that you save can be incredible.
This is an example only and rates and terms can change