125% Home equity loans are second mortgages that admittedly think "outside of the box," because they allow homeowners to go beyond their homes' equity to finance things that typically wish a valuable amount of equity. The 125% home equity loan is a 2nd loan that is secured by your home and personal credit. The 125% loan subordinates to the first mortgage, just like regular second mortgages do, but since the equilibrium of the new loan exceeds the value of your home, your reputation becomes an valuable element for loan approval. Any mortgage added that subordinates to your existing mortgage, and also exceeds the value of your asset is considered to be a 125% home equity loan.
125 Home equity loans are 2nd mortgages that are secondary to 1st mortgages, but they don't have to reach 125% of the home's value to be considered a 125% loan. Any loan that has a combined loan to value between 101-125% is noteworthy as a 125% second mortgage. If the mortgage lender is required to foreclosure because you haven't made the mortgage cost for a period of months, the lien owner will receive no recourse, because there is no equity. This is the traditional suspect that the interest rates are so much higher with 125% equity loans.
Mortgage Refinance 125% Ltv 2011
Unique Niches of a 125% Home Equity Loan:
Primary Use of Funds: 125 home equity loans are used to join high rate credit, installment loans, and home improvement projects.
125 Loans offers a singular lump sum disbursement of funds at the close of escrow. You can't borrow, and re-borrow money on the same loan, like you can with home equity reputation lines.
125% Home equity loans do not offer 30 year fixed rate terms
Re-payment term options (15 year, 20 year or 25 year terms)
Home equity terms are set for a close-end mortgage with a exact amount of monthly payments that is expensed with a fixed interest rate.
125% home equity loans do not allow interest only cost options
All 125% loans wish fully amortized payments that consist of both valuable and interest.
No "balloon" cost features with 125% loans
Balloon notes are not allowed when exceeding the value of the home.
The interest paid on a 125% home equity loan is tax deductible to 100% of the value. In some cases interest paid for home improvements may grant tax deduction exceptions, but consult your tax advisor.
Since the mortgage lenders' risk is more significant, these home equity loans will be offered at a higher interest rate than 1st mortgage rates. The interest rate is the issue many homeowners get flustered about when they are inspecting taking out a loan that exceeds their homes' value. Don't correlate your 1st and 2nd mortgage interest rates. They are apples and oranges. Your 1st mortgage won't let you pay off high rate reputation card debt, while taking the loan amount beyond the homes' value. More foremost than the interest rate is the amount of money you stand to save each month with a 125% home equity loan. If this loan saves you adequate each month to finance a nice car, then you might want to grab the keys and start the 125 engine.
What is a 125 Home Equity Loan?
