2nd Mortgage Rates

Many people use second mortgages to bring in some extra money that has both low interest rates and tax advantages. The rates today are so low that even people who previously were not in the market for homes or loans are looking for mortgages and second mortgages.

When you have a second mortgage, it is second in line to the first mortgage if a problem arises and the home is sold or foreclosed upon. Because of this priority of being second, 2nd mortgage rates are somewhat above those for a first mortgage. There is additional risk to the lender of not being repaid if the borrower defaults on their payments for either loan. It is another reason why second mortgages are usually shorter term loans than first mortgages.

Many people acquire a good second mortgage rate by getting a home equity loan or HELOC (home equity line of credit) loan. Second mortgage rates for any type of additional loan that uses the home as collateral are averaging around 5% nationally. Rates vary from state to state, depending on the market and local risk factors. A second mortgage rate is also affected by the borrower’s credit status.

Current 2nd mortgage rates are favorable especially to people who have excellent credit. They can obtain home equity loans at interest rates that are around 4% to 5%. Those with good credit can get these loans at almost as low a cost. Even people who are credit challenged can find good refinancing rates for second mortgages if they have equity in their home and are trying to improve their credit scores.

Economic conditions in the country and the world will affect the money markets and loan interest rates. When things happen to drop the interest rates again, you should be ready to make your move to acquire the favorable 2nd mortgage rate immediately. Watch out for contracts that feature adjustable interest rates; if rates go up, so will your mortgage monthly payments. These are ARMs, or adjustable rate mortgages. They are short term and many times are used for refinancing or home equity loans.

In comparing second mortgage rates, it is important to look at all the small print about fees and other costs that could occur, such as penalties and points. It is necessary to compare apples to apples and not to bananas, so to speak. Every company will have a different way to present their loan products and to work with your credit score. Be sure they are not running your credit record. Do not give them your driver’s license or other information they might be able to use to check your credit record. If they balk at giving you information, walk away; there are plenty of other lenders who want your business.

This is one of the best times in history to acquire low interest rates on second mortgages. It is an opportunity that has not been seen in decades. If you have an opportunity to save a significant amount of money by getting a better mortgage rate on second or first loans, do it!