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A second mortgage can be used to convert equity into cash without incuring the expense of obtaining a new first mortgage. Also, in an 80/20 transaction a second mortgage can be combinded with a new first mortgage in order to obtain 100% mortgage financing without have to pay the higher interest rates associated with a single 100% loan.
A second mortgage can either be a Home Equity Line of Credit (HELOC) or a closed-end second mortgage. A HELOC is a revolving account just like a credit card so as you pay down the balance, your available credit increases. With a closed-end second mortgage, the lender pays out the entire loan amount at closing. Either option can be used for purchase or refinance transactions.
Call today to learn more about your options.
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