A second mortgage is a secured home loan. Basically, you have a first mortgage on your home, which is typically your 30-year. The second loan allows you to borrow from the existing equity (home equity is the difference between how much you owe and the value of your home).
WHY DO PEOPLE GET SECOND MORTGAGES?
Homeowners may choose a second mortgage for many reasons. Commonly, a second home loan can be combined with a first mortgage to refinance or purchase a home. Additionally, homeowners use them to pay off debt, pay for schooling, avoid mortgage insurance, if you need cash on hand for an emergency, or if you want to upgrade your home.
TYPES OF SECOND MORTGAGES
TYPE 1 | HOME EQUITY LOANS
Usually, a home equity loan is a fixed-rate second mortgage. You receive funds in a lump sum and pay the balance in even installments in terms up to 30 years.
Second mortgage rates are usually higher and the qualifying requirements are more stringent than a first mortgage.
TYPE 2 | HOME EQUITY LINES OF CREDIT (HELOCs)
Most home equity lines of credit (HELOCs) are second mortgages, but they can be secured by a home without a first mortgage. A HELOC is a line of credit like a credit card. Generally, the rate is variable.
SECOND MORTGAGE FAQs
Is it better to refinance or take out a second mortgage?
It’s better to refinance if you can get a better rate on your first mortgage. A second mortgage makes more sense if you need a small loan amount or you want to leave your current first mortgage as-is.
Can you get a second mortgage to buy another house?
Yes. You can take out a second mortgage on your primary residence, and use the home equity loan or HELOC funds to make a down payment on another house.
Can you refinance a second mortgage?
Yes. You can refinance a second mortgage with a HELOC or Home Equity Loan. If you find a better rate, it may be a great idea to refinance. Remember though, you may have to pay closing fees.
PEARL HAWAII’S HOME LOAN BENEFITS
FOCUS ON YOUR HOME & WE WILL FOCUS ON YOUR LOAN
Fixed rates available
No Annual Fees
No Pre-Payment Penalties
Quick and streamlined experience with expert, personalized service
Rate lock-ins: Your rate is locked at the time of application until your loan is funded, giving you the flexibility and freedom you need.
15, 20, and 30 Year Terms (Owner-Occupied)
Borrow up to $1,149,825
If you are looking to refinance your home or obtain a second home loan, Pearl Hawaii’s loan professionals can help. We will help you receive the home financing you need, payments that are comfortable, and at an amazing rate. Interested? Contact our loan officer to find out how you can get started.
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