With all of the interest rate talk these days at the water cooler, it seems that everyone knows where the interest rates are going except for the Federal Reserve. Of course citizen are speculating, and if they do predict where the interest rates are headed, they legitimately could not tell you when they are rising or dropping.
As most of you have realized by now, the first mortgage rates may not go back down to the 2004 levels when the 30 year fixed was in the low 5's. Over the last 3 years, most homeowners have refinanced to an interest rate they are very comfortable with.
As the housing store shifts, the inquire for money is still great, but citizen will be taking out second mortgages to get cash and concentrate revolving debt. Second mortgages, also called home equity loans have come to be favorite alternative loans that do not need homeowners to refinance their current home loan. As you can imagine, many homeowners would rather leave their low interest 1st mortgage untouched and naturally take out a second mortgage on the asset for incidental cash like make home improvements or financing a second home.
With the store changing, it is leading for consumers to understand how home equity loans work. 2nd mortgages are liens that are taken out against your home for purchase, or cash out refinancing. Second mortgages do use your home's equity, so you want to be thrifty and pragmatic when leveraging your home.
Home Equity loans 125% - These liens are high Ltv 2nd mortgages that all you to borrow against your home's future value. It is hard to believe, but no mortgage guarnatee is required! The interest rate is fixed and the most coarse use of funds for these loans is debt consolidation.
Home Equity Line of reputation 100% - Home equity lines are more revolving reputation that carries a variable interest rate based on the Fed's Prime index reported in the Wall road Journal. You only pay interest when you use funds from the line, and only the interest is due each month during the draw period. The most coarse use of funds with a Heloc is for financing home improvements.
Which ever second mortgage appeals to you, remember to look at the closing costs, interest rate, and either or not there is a pre-payment penalty. When you are talking with some brokers or lenders the best way to collate the loans is to view the "Good Faith Estimates" which will be in case,granted with the loan disclosures. If you don't qualify for a 2nd lien, reconsider a Fha mortgage loan that offers cash out and refinancing up to 95%.
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