Are all Second Mortgages Created Equal?

Americans place a high premium on being number one. But, there's one arena-mortgages-in which being number two isn't so bad, especially for you, the consumer.
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A second mortgage is a second lien on your property. Lining up right behind your first mortgage, it allows you to borrow against the remaining equity in your house. For example, if your house is worth $200,000, and the principal balance of your first mortgage is $160,000, you have $40,000 in equity remaining. With a second mortgage, you can tap that remaining $40,000 via a home equity loan.

There are two types of 2nd mortgages, each allowing you to take advantage of different types of mortgage rates. They've been developed to attract consumers during both high and low interest rate climates.

Fixed-Rate Home Equity Loan: In regards to second mortgage rates, this type of equity loan is fixed. Since your rate is set in advance, your monthly repayment is stable. This provides you with a hedge against rising interest rates. Even though the rate might be higher than that of your first mortgage, the smaller means that your monthly payments won't be as hefty.

Home Equity Line of Credit (HELOC): By far, the more flexible of the two loans is the HELOC, which works a lot like a credit card. You're given a credit line and you can borrow against it. When you withdraw funds, you begin paying interest. While you do have greater flexibility with the HELOC, you're subject to variable 2nd mortgage interest rates. As a result, when rates spike, so do your payments.

Being number two isn't so bad when it means helping you meet your financial needs. Fixed-rate home equity loans and HELOCs are second mortgages that can help you consolidate debts or free up cash for home improvements or college tuition. That's why, for many consumers, second mortgages are a first-rate financial solution.

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Refinancing in Spite of Bad Credit

For millions of Americans, a home mortgage provides a gateway to the American dream. It's more than shelter and a place to raise a family; it's also a sound financial investment. For those who've stumbled financially and incurred bad credit, a home mortgage can also be a stepping-stone to better and brighter days.
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While the knee-jerk reaction is to believe that you can't qualify for a loan just because you have bad credit, you'll be surprised at how many lenders have specific programs designed to get you back on your feet.
Bad credit mortgage, good common sense

There are plenty of lenders who are eager to provide a debt consolidation loan to a prospective borrower. From a business perspective, you can't argue with their rationale. They realize that if they can help you consolidate your debts and get your finances back in order, despite having a bad credit score, you'll likely be loyal to that lender when your credit rating is healthier.

Lenders understand that, even though you have bad credit, your life must go on. That's why they offer a wide variety of lending products. A first mortgage cash-out refinance allows you to tap equity for short-term cash while consolidating your debts. If you have a good rate on your first mortgage, you might opt for a second mortgage-a variable-rate home equity line of credit or a fixed-rate home equity loan. There are plenty of options on the market-shop around and find the one fine-tuned for your situation.

Bad credit doesn't have to be a lifelong nightmare. By using your home's equity to get a debt consolidation loan, you can turn your finances around and enjoy the same perks of the American Dream as all those credit A-listers

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Texas Mortgage Rates

Texas Mortgage Rates
Mortgage loans for Houston real estate
With the rising cost of living, buying Houston real estate might seem like an unaffordable dream, especially if you take your financial situation and expenses into stock. The perfect answer to making your dream come true would be by applying for a real estate loan to purchase the Houston real estate . This would ensure that your finances remain stable and the payment that you need to make for the Houston real estate gets spread out over a period of time. The rates for mortgage loans differ throughout the country and rates for Houston real estate mortgage loans may differ greatly from what you might know, so in depth research is required before applying for a real estate loan.

Analyzing your pay back capacity
When approving mortgage loans for Houston real estate or for any other property, banks take into consideration a number of factors. These primarily include your pay back capacity. Before applying for a real estate loan, you should consider your financial situation and on the basis of mortgage rates Texas lenders are offering, analyze what your pay back capacity is. This would essentially depend on what you earn, the capital that you have built up and the current mortgage rates Texas lenders are offering. Our experts would help you in determining the ideal real estate loan for your Houston real estate and will further assist you in finding a mortgage rate in Texas that is perfect for you.

Comparing Texas Mortgage Rates
To ensure that you pick a mortgage rate in Texas that is suitable, you can log on toSavings Road Mortgage Group and make certain essential calculations before you apply for a real estate loan. The Rent vs. Own Calculator allows you to compare the costs of renting a residence and buying a home. You could make calculations on the basis of a mortgage rate in Texas that lenders are offering. As a result, you would be able to decide if you should buy or rent a home. The Mortgage Qualifier shows you how much income you need to buy a home, based on your income, the current Texas mortgage rates and other factors. As a result you can take a decision if you can afford a real estate loanimmediately. The Mortgage Loan Calculator displays the payment that you would have to make towards different mortgage loans on the basis of mortgage rates Texas lenders are offering, for the term of your real estate loan. As a result, we can help you decide which Texas mortgage rates suit you best since we work with many Texas mortgage companies.

Applying for Mortgage Loans
When you apply for mortgage loans, you would need proper documents to substantiate the information that you are providing. Before applying for mortgage loans for Texas or Houston real estate we would inform you about all the Texas mortgages available and the current mortgage rates Texas lenders are offering. Following that, we would draft your application for a mortgage against the Houston real estate, and that would include information regarding your job tenure, employment stability, income, your assets including property, cars, bank accounts and investments and your liabilities, including auto loans, installment loans, mortgages, credit-card debt, household expenses and so on.

The mortgage rates Texasmight fluctuate with changing market conditions, in this case, one of our mortgage brokers would be able to guide you. Keeping the current mortgage rates Texas lenders are offering, he or she would be able to analyze if this is the right time to apply for a mortgage loan and if the current Texas mortgage rates are suitable for you.

Finding the Best Texas Mortgage Rates
The main aim that a borrower would have while applying for a real estate loan is to get the cheapest loan that fits the needs. We atSavings Road Mortgage Group can help you find details about the current Texas mortgage rates and can further assist in selecting the mortgage loans that would suit you the best. We can provide access to information about Texas mortgages, Texas mortgage companies and the current mortgage rates Texas lenders are offering. As a result, with this information as your base, you would be able to pick from a competitive set of Texas mortgages that are being offered by Texas mortgage companies.

Please know we have access and daily updated information about Texas mortgages and Texas mortgage companies. In addition, you might need assistance before taking a final decision regarding the best mortgage rates Texas has, and our experts on Texas mortgage rates would be able to provide proper guidance in this case. You would also be able to compare the current Texas mortgage rates with those that were being offered. Our experts would also be able to guide you if this is the right time to apply for mortgage loans. Once we have found the mortgage rate in Texas that satisfies your real estate loan needs, all you need to do is get started!

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About the Author

Max Baba is the founder & CEO of www.SavingsRoad.com, a leading Residential and Commercial Mortgage Brokerage company. He has about 11 years of experience in the real estate arena, ranging from financing to legal consulting, utilizing both his finance degree and law degree.

Understanding the Loan to Value Ratio

These days many renters are taking advantage of the present low level of interest rates to get into a home of their own. In addition, many current homeowners are taking advantage of those same low interest rates to refinance their home mortgage loans at more favorable interest rates.

Therefore, whether you are a current renter moving into a home of your own or a long time homeowner seeking a lower interest rate, it is important to understand one of the most important financial formulas - the loan to value ratio.

The easiest way to understand the loan to value ratio is that it represents the relationship between the amount of the outstanding mortgage as compared to the current value of the home. Since housing prices have been rising very fast in many areas of the country, many current homeowners have built up quite a bit of equity in their homes.

Many homeowners, for instance, find themselves in the happy circumstance of owning a home that is worth substantially more than they paid for it, or substantially more than they owe on it. This means that the homeowner has equity that can be used to borrow additional funds, refinance the mortgage or even shorten the term of the mortgage loan.

It is fairly easy to calculate the loan to mortgage ratio. It simply requires knowing approximately how much your home is worth, the amount of the outstanding mortgage and the amount of the original down payment. For our exercise we will use a home value of $150,000. The approximate value of your home can be estimated by looking at what similar homes in your neighborhood have sold for.

When calculating the loan to value ratio, the first step is to take the original purchase price of the home, in this case $150,000 and subtract out the amount of the original down payment. For this exercise we will use a down payment of $20,000.

The loan to value ratio is calculated by subtracting the $20,000 down payment from the purchase price of $150,000. In this case the resulting number is $130,000, which represents the $150,000 purchase price minus the $20,000 down payment. Dividing the $130,000 loan amount by the $150,000 purchase price gives us a loan to value ratio of 0.87, or 87%.

It is important to know your loan to value ratio, since this number will be important to lenders any time you apply for a loan.

About the Author

Keith is a web site designer that builds useful content into sites
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Refinancing: Debts and Taxes

In the 19th century, Sherlock Holmes relied on impressive observational skills and shrewd reasoning to solve the most complex of mysteries. Holmes' brilliance was never applied to mortgage-related tax deductions, but surely he could have unraveled that case, as well. The famous detective always moved deliberately, approaching each new mystery with a closer look at the facts.

Whether you have an original mortgage or refinanced mortgage, there are three main tax deductions associated with home ownership: mortgage interest, real estate taxes, and points paid. The tax facts relevant to refinanced mortgages are discussed below.
Mortgage Interest

Generally speaking, the interest on a refinanced mortgage is tax deductible. Exceptions arise for homeowners who refinance to cash out equity, and then use the equity-related funds for something other than improving their home. In this situation, only the interest on a maximum of $100,000 of the equity debt is tax-deductible. Here's an example:

You refinance your original $125,000 mortgage for $300,000. The extra $175,000 goes towards vacations, new cars, and other discretionary spending. You can deduct the interest related to the $125,000 refinanced from the first mortgage, and $100,000 of the new equity debt. The interest on the remaining $75,000 would not be tax deductible.
Real Estate Taxes

Real estate taxes are deductible in the year they are paid to the property tax collector. You cannot immediately deduct monies put into escrow for future property taxes; that expense would be deducted later on, in the same year those funds are applied to your property tax liability.
Points

Points paid on a refinance mortgage are, in most cases, deducted proportionately over the life of the loan. That said, points might be fully deductible in the first year if the refinance is used to fund home improvements. You must meet specific requirements to qualify for this deduction, so please check with your tax advisor.

The case isn't closed just yet. Just as Sherlock Holmes outlines his conclusions with trusty Dr. Watson, you should discuss the details of your deductions with a qualified tax advisor. Once you do, you'll see that they, too, are elementary.

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Don't Take Advantage of Your Second Mortgage

Make no mistake-a second mortgage is a financial tool that can fix many problems. Need to finance a college education? You can tap the equity in your home for those tuition payments. Want to improve your property with a new kitchen? A 2nd mortgage gets you the cash you need. Looking to start your own business? Home equity loans can be the hero.
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While it's a great tool, it does have some potential shortcomings. Counting on your home equity to double as a savings account can be a risky proposition. Here are two examples of why relying on a home equity fix can leave you broke.
1. Mortgage rate spikes can rob you blind

Let's assume that you're counting on using your home equity loan or a refinance mortgage to pay for your child's college education. Perhaps when you developed this plan, rates were low, and a home equity loan, coupled with a tax deduction, seemed like cheap, easy money. Fast forward to your child's college years. Your plan has gone awry, as high interest rates make borrowing very expensive. If this were to happen, that "cheap" money would suddenly be very expensive, making it difficult to meet your monthly payments.
2. The bubble bursts

Anyone who's suffered through the recent housing market stagnation knows the dangers of buying high and borrowing low. If you purchased a home when values were at the peak, the market may have cooled and cut into your home's equity. Suddenly, when it comes time to tap all the money that you had counted on, you find that your home doesn't appraise as highly as it once did. As a result, there's no equity to borrow against, and you're short on funds.

There's no doubt about it-home equity is a great financial tool. But as these two examples indicate, treating it as a savings account can be risky. If you're planning some significant future expenses, beef up your savings while you're building equity. There are simply too many market forces that could work against you if you don't.
Start here to compare mortgage rates from top lenders in our network.

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Refinancing Your Mortgage? Know the lingo

If the saying "familiarity breeds success" holds true, it would be in your best interest, if you're looking for a mortgage refinance, to understand the terminology. There's no need to pour over dry-as-dust mortgage textbooks. Learn a few basic terms, and you'll be headed in the right direction.

Adjustable-rate mortgage:
A loan with a periodically changing interest rate. The mortgage rate is pegged to a specific economic indicator such as treasury bills or the prime interest rate, for example. Terms can vary greatly, and often offer very low introductory rates during the early years.

APR:
The Annual Percentage Rate (APR) is intended to include all of a lender's closing costs, giving a true yearly interest rate. However, many lenders calculate their APRs in different ways.

Fixed-rate mortgage:
A loan in which the rate is set at the time of closing and is constant throughout the mortgage term.

Good Faith Estimate:
Lenders are required by law to produce a Good Faith Estimate, which details all the costs you'll be charged to close your loan.

Loan-to-value (LTV) ratio:
The ratio of your loan amount to the appraised value of your home. (Loan amount/appraised value = Loan-to-value ratio.) Generally expressed as a percentage, a higher LTV can trigger the need for private mortgage insurance or a higher rate.

Points:
A point on a mortgage is 1 percent of the total loan value. For example, a point on a $100,000 mortgage is $1,000 (.01 X $100,000).

Term:
The length of time that you have to repay your mortgage loan. Generally expressed in years, the typical term for most mortgages is 15 to 30 years.

Third party fees:
Charged by vendors, such as appraisers and title companies, these are fees that your lender uses to assess the quality of your loan.

There are plenty of other commonly used mortgage terms, but these are the basics. Study up if you have time. Like any educational initiative, it's bound to pay off in the end.
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