2nd Mortgage Loan
Getting a 2nd mortgage loan can help people bring down their monthly payments. This form of refinancing often offers lower interest rates, as well, so people can start with their new mortgage by saving money in two different ways. The extra money each month can help a person climb out of debt on other fronts, like credit cards or school loans. Taking on a 2nd mortgage is not always a positive thing. Many people take on a 2nd mortgage when they are having extreme financial problems. The additional loan relieves some of the burden, but it can often ensure that a person will be paying for his home for an extremely long time. Also, while it does help people pay off certain things, it does not allow them to fully get out of debt, because they are now saddled with long-term mortgage payments.
Types of 2nd Mortgage Loans
There are a number of options when it comes to mortgage loans. If a person can qualify for more than one type of loan, he can decide which type will be most beneficial. When taking a 2nd mortgage, he is more than likely looking for lower monthly payments, so a lengthy (30 year) fixed rate mortgage loan is probably the best bet. People who are taking out a 2nd mortgage loan because they have purchased a 2nd property will often have more leeway in choosing a loan. They might very well be able to afford higher monthly payments. In this case, a short-term (15 year) mortgage loan can greatly benefit them. They will end up paying less in overall interest and they will be done with at least one of their mortgages in a relatively brief time.
The 80/10/10 Consideration
Another definition of a 2nd mortgage is when people use 80/10/10 financing to purchase their homes. Borrowing 80 percent from one lender and 10 percent from another (sometimes even the same lender), people avoid having to pay for and deal with private mortgage insurance, or PMI. This is a type of 2nd mortgage loan that is becoming more popular.