Can I Save Money Paying off Credit Card Debt with a Second Mortgage?

Can I Save Money Paying off Credit Card Debt with a Second Mortgage?




Unfortunately there is no simple answer to this question. The answer could be yes or it could be no depending on a number of factors. In general credit card debt carries a significantly higher interest rate than the average second mortgage but whether or not you are actually saving money by consolidating the credit card debt will depend on the amount of credit card debt as well as the terms of the second mortgage and the refinancing costs.

The most prominent advantage to paying off credit card debt with a second mortgage is a reduced interest rate. Most credit cards have interest rates which are significantly higher than the interest rates offered on mortgages. The compounding interest associated with credit card debt where debtors wind up paying interest on the original debt plus additional interest can be very costly. Conversely a simple interest second mortgage does not have this same effect. Homeowners enjoy lower monthly payments with lower interest rates and these lower payments enable the homeowner to save more money each month.

The other advantage is tax deductibility. The interest paid on a home loan is often tax deductible but homeowners should consult a tax expert to ensure the interest on their second mortgage used to repay credit card debt would be deductible. If homeowners are able to deduct this interest, it can result in an overall savings for the homeowner. Homeowners who are not able to deduct this interest still enjoy the savings associated with the lower fixed mortgage rate or adjustable rate mortgage they choose.

The first thing to remember when deciding whether or not to consolidate credit card debt under the umbrella of a home equity loan or second mortgage is the refinancing costs involved. There are often a number of fees involved in refinancing a home including closing costs, loan origination fees and application fees. All of the fees involved should be examined closely and these fees should be compared to the amount the homeowner would save in interest by refinancing their home to pay off their credit card debt. If the savings is higher than the cost of refinancing paying off the credit card debt will result in a savings. If the savings is not greater than the associated closing costs refinancing would not result in an overall savings.

Mary is an acclaimed free-lance writer who created many useful mortgage related articles. You can read more mortgage related loan articles at Nationwide Second Mortgage & Refinancing. To get more equity loan advice & home equity finance tips, please visit the specialists for Second Mortgages and debt consolidation loans.

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Understanding Credit Scoring on Mortgage Refinancing or Second Mortgage Loans

Understanding Credit Scoring on Mortgage Refinancing or Second Mortgage Loans




For years, lenders have utilized "credit scoring" to determine whether or not an individual is a good credit risk. Credit scoring has recently become a hot topic, due in large part by the mortgage lending industry's willingness to use the process to evaluate one's likelihood of repaying home mortgage refinancing or second mortgage loans. Even insurance companies use credit scoring as part of their underwriting procedure when writing automobile and home insurance coverage.

Credit scoring is a system, based on a statistical program, which awards points for certain factors that help predict who is most likely to repay a debt, such as a mortgage refinancing or second mortgage loan. The total number of points, or score, is what lenders use to determine an individual's creditworthiness. A large random sample of customers is taken, and analyzed statistically to identify characteristics relating to credit risk. These factors are then given a weight based upon how strong a predictor they are of who would be a good credit risk.

Credit scoring models do vary from lender to lender, but most generally include the following factors:

1) Your current amount of debt as compared to your potential total available credit.

2) Payment history on current and previous accounts.

3) The length of your credit history.

4) The number of credit inquiries (each time a creditor pulls credit in response to your application).

5) The number of separate open accounts.

6) Collection actions including judgments, repossessions, foreclosures, and bankruptcies

Using the statistical program, lenders compare this information about you to the credit performance of other consumers with similar profiles. Therefore, it is usually more reliable than a subjective or judgmental decision, because it is based on real data and statistics. Although it may seem somewhat impersonal, when used properly, credit scoring can allow creditors to evaluate credit applications faster and more accurately than individuals, in an impartial and unbiased manner.

In addition, the home mortgage refinancing and second mortgage loan process has been shortened as a result of the speed in which mortgage lenders can now make decisions utilizing the credit score model.

Click here for more information on Mortgage Refinancing and Second Mortgage Solutions [http://www.americanmortgagefundingcorp.com].

Bob Peckenpaugh is a professional mortgage planner with over 15 years lending and banking experience. His programs assist clients with increasing cash flow, reducing liabilities and building equity by integrating a client’s mortgage decision with their overall financial plan. He is a manager with CFIC Home Mortgage providing both purchase and refinance transactions. Bob holds a B.S. in Marketing and Management and is Fair Credit Reporting Act certified. Click here for more information on Mortgage Refinancing and Second Mortgage Solutions [http://www.americanmortgagefundingcorp.com].

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Refinancing 2nd Mortgage - Tips to Refinancing 2nd Mortgage

Refinancing 2nd Mortgage - Tips to Refinancing 2nd Mortgage




There are several reasons why you should consider refinancing your second mortgage. If you have a home loan, your options for acquiring extra cash are many. In fact, if you have a second mortgage, you have likely taken advantage of one method for getting a large sum of money for necessary home improvements, debt consolidation, etc. The interest rate and terms received on 2nd mortgages will depend on your credit. Fortunately, if you received unfavorable terms, a refinancing may be in your best interest

Reasons to Refinance 2nd Mortgage

In most cases, homeowners apply for a second mortgage because they are in need of extra money. Getting approved for a personal bank loan is very difficult. Thus, 2nd mortgages are more attractive because the loans are practically guaranteed. A 2nd mortgage is secured by your home's equity, which makes lenders comfortable and more eager to lend the funds.

Of course, getting approved for a 2nd mortgage will not always guarantee the best loan rates and terms. If you applied for a 2nd mortgage loan with poor credit, your quote likely included a higher interest rate. Perhaps two points above current market rates. The primary reason why many homeowners choose to refinance their 2nd mortgage is to receive a better interest rate. Better rates mean lower payments, which will save you thousands throughout the duration of the loan.

Before applying for a second mortgage refinancing, check your personal credit report to ensure that your credit score has improved. Lenders will also review this score to determine whether you are a prime candidate for a low rate refinancing. If your credit score has not improved, postpone applying for a refinancing.

Refinance and Eliminate High Interest Debt

Homeowners also choose to refinance their 2nd mortgage in order to payoff high interest credit card balances and other loans. A 2nd mortgage is ideal for debt consolidation. Sadly, after eliminating high interest balances using the funds received from a second mortgage, some consumers acquire additional debt. In this instance, refinancing a 2nd mortgage and receiving cash-out will provide you with the funds needed to eliminate newly acquired debt.

Carrie Reeder is the owner of http://www.abcloanguide.com, an informational website about various types of loans.

View her recommended mortgage refi lenders.

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Second Mortgage Refinancing - Does It Make Sense for You?

Second Mortgage Refinancing - Does It Make Sense for You?

If you are carrying a second mortgage on your home refinancing may be in your best financial interest. If the hassle of dealing with two banks, the cost of having private mortgage insurance, or a higher rate are concerns to you it may be worth considering second mortgage refinancing. A loan officer may give you biased advice so look at the facts to see what makes sense for you.

Is it a hassle for you to write two checks each month to two different banks? For many people the simplicity of dealing with one lending institution is a great convenience. Building a relationship with your primary lender can have additional benefits too. You may be able to avoid extra fees or negotiate extensions should you need them.

Are you paying for private mortgage insurance (PMI)? This is typically 0.5% of your mortgage loan each year. If you have a $200,000 mortgage that means you are paying about $1,000 annually for PMI. Lenders usually require mortgage insurance if you do not have enough of a down payment at the time you purchase your home. If you have made several mortgage payments or the value of your home has increased you may be able to eliminate the need for PMI and save yourself money each month by doing a second mortgage refinance.

Is the interest on your second mortgage too high? Did you get an adjustable rate mortgage that is going to significantly increase soon? When you are trying to get into your home sometimes a second mortgage with an unattractive interest rate is your only option. However, once you have paid your bills on time and established some equity in your home you may be able to refinance at a much lower rate. Today's rates are much better than they were just a few years ago. The savings could be substantial.

Second mortgage refinancing is not for everyone. It may be necessary to continue carrying two loans even with an inflated interest rate if that is the only way you can stay in your home. But if you want some convenience, have some additional equity, or qualify for a better rate you can save by combining your mortgages or refinancing. Do some research and get the facts. A few hours of reading and discussion your options could pay off in lower payments each month.

Save yourself time and money with our 5 simple steps to understanding mortgage basics.

When is the best time to apply for a fixed rate mortgage? What are adjustable rate mortgages based on? Should you opt for a 15 or 30 year mortgage? What are the advantage of FHA loans? And should you use a broker or bank? We answer these and other questions in short easy to read articles written without "mortgage speak".

Visit us at types-of-mortgages.com [http://www.types-of-mortgages.com] for the exclusive free reports.

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Tips For Second Mortgage Refinancing To Save You Money

Tips For Second Mortgage Refinancing To Save You Money

Home loan refinancing has exploded in recent years due to the downturn in interest rates. People who were once paying 8%-10% in interest on home mortgages are now able to get financed at rates as low as 6%. This gives the homeowner a much lower house payment and more money in their pocket. Well, many others are also looking at second mortgage refinancing as well. Here are some tips to help you in this aspect of refinancing.

People get second mortgages on their homes for various reasons. Sometimes it is to get their hands on much needed cash to pay for expenses such as college or a new car, etc. Other times it is to used to purchase a second home. Second mortgages will generally always be much shorter in length than a first. In most cases they run 5-10 years.

Why refinance a second? Just for the same reason you would refinance your original mortgage you want to get a lower interest rate and save money on your loan. It's a sound financial decision in most cases.

When you make the decision to refinance a second home mortgage, there are some things you should look for before signing any new contract.

- Look at several different lenders to find a good one

- Look online for more information and lending choices

- Always ask questions and if you feel you aren't getting the right answers...scratch that lender off your list

- Know what closing costs, points and fees will apply to your second mortgage

These are only some of the major points to be aware of when looking to refinance.

You should be able to easily find a good lender if you just ask for referrals and look around. Most people you work with are happy to recommend a lender that they have had a good experience with. Just be careful, check them out, and ask questions. This will assure you that your second mortgage refinancing will go smoothly and quickly.

By the way, you can find out more about Second Mortgage Refinancing [http://www.HomeRefinancingA-Z.com/Second_Mortgage_Refinancing.html] as well as much more information on everything to do with home refinancing at [http://www.HomeRefinancingA-Z.com]

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Refinancing Second Mortgage - Knowing When to Refinance

Refinancing Second Mortgage - Knowing When to Refinance

Timing the refinancing of your second mortgage is just as important as
finding low rates and fees. Before you decide to refinance, make sure
that you have a clear benefit. Either save money with lower rates or
protect yourself with the security of a low fixed rate second mortgage.

When Lower Rates Equal Savings

Lower rates can equal savings if you have enough time to recoup any
closing costs or other fees. In most instances, a point drop of two
percent or more with seven years left on the loan makes it cost efficient to
refinance. To see if this is true in your case, compare what you are
paying now with the potential payment of a new mortgage.

Combining both your first and second mortgages will further reduce your
rates and save on application fees. This only works if your primary
mortgage has high rates currently.

Protect Yourself From Rising Rates

With an adjustable rate second mortgage, refinancing can protect you
from rising interest rates. Even with caps in place, you could see your
current loan period length, adding to your total loan costs.

Refinancing for a fixed rate home equity loan will provide you with the
security of a regular payment schedule. In some cases, you may also
find a lower fixed rate than your current adjustable rate.

Timing Is Important With Refinancing

With most home equity loans, you pay most of the interest at the
beginning of the payment period. So by the last half of your loan, you are
paying hardly any interest. To see the biggest savings, you need to
refinance early.

If you plan to move soon, then you will also want to hold off on
refinancing. While closing costs usually only equal 1% to 3% of principal, it
takes a couple of years to regain these costs.

Try using one of ABC Loan Guide's Recommended Second Mortgage Refinance Lenders.

To see if you have a clear benefit to refinancing, start looking at
loan quotes. Figure the potential costs of interest and fees, and compare
them to your current second mortgage. Factor in your future financial
goals, and you will have a good idea if refinancing is for you.

View our recommended lenders for Bad Credit Mortgage Refinance. Also, view our recommended sources to Check Your Credit Report For Free.

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Refinancing, Second Mortgages, and Remortgages

 Refinancing, Second Mortgages, and Remortgages




For most homeowners, their house is their greatest asset. When an emergency comes up, therefore, it's also where they turn; why take out a high interest loan when you can borrow against your equity? Of course, the danger in doing so is that you put your house on the line if you can't make the payments, but for people with stable income who are experiencing the need for extra cash, this can be a good option.

Generally there are three options for taking money out of your home. A cash-out refi lets you renegotiate your current mortgage, hopefully dropping the interest rate, and borrow more than you currently owe. A second mortgage is an additional loan against the house; generally these will have higher interest rates because the bank that holds the second note has to get in line behind the first lien holder for payment if you default. A remortgage is similar to a refi, but with a different bank; the new lender pays off your first mortgage and returns any additional cash to you, allowing you to draw down equity. With a remortgage, you never have two mortgages out on the house, so they're easier to quality for and provide a lower interest rate than a second mortgage.

To qualify for a remortgage, you'll need the same paperwork as you did for the first mortgage: tax statements, pay stubs, a reasonably good credit rating; basically everything to prove that you're likely to continue making the payments on your loan.

You can read more about remortgages and bad credit remortgages at twentiesretirement.com. Find out if a remortgage is right for you!

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