All About Getting a Second Mortgage

A second mortgage is any mortgage that is in second position behind the first mortgage. A second mortgage can either be a fixed second mortgage or a home equity credit line.

Here we are going to discuss the fixed second mortgage.

Unlike the equity line of credit the fixed second mortgage has a fixed interest rate. Your payments will be exactly the same for the full length of the term.

As long as you qualify you can borrow up to 100% of the equity in your home. The interest rates can vary anywhere from 1% to 8% higher than a 30 year fixed interest rate. Obviously the better your credit the more you will be able to borrow and the lower your interest rates will be.

The majority of fixed second mortgages have repayment terms of 15 to 30 years. There are a few exceptions to this where the term may be shorter or longer. Make sure to ask your loan officer what the payment term will be.

The higher your credit scores the more of your equity you should be able to get access to with your second mortgage.

The lowest credit score that I know of where you can still borrow 100% of the equity in you home is a 740. Once you scores drop below this you will be limited to 80% to 95% of the equity of your home. And once you drop below a 640 credit score you can pretty much forget about getting a second mortgage.

Second mortgages are a wonderful way to tap the equity of your home with out the major expenses of a refinance. You can use the money your receive from your second mortgage to do repairs to your home, pay off debt, pay for school, and just about anything else you can think of to do with the money.