Getting a Second Home Mortgage

 

If you are planning to buy a second home without paying for it in cash, you may need to look at financing the purchase through a second home mortgage. In the simplest of terms, this is a second loan against a home, which still has an existing mortgage. It could also be mortgage on a residential property that hasn’t been lived in for the greater part of the year. Either way, there are some requirements and technicalities involved in procuring such a loan.

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Reasons for this Type of Mortgage

Second home mortgages are made for a variety of reasons. Some avail of these to buy second homes, which they will fix and sell when it becomes possible to make a reasonable profit while some actually buy homes as a second residence near their children’s colleges or universities.

Very often, homeowners take out a second mortgage to buy property that they will rent out. This rental income is expected to help pay for the mortgage even as the property increases in value over time. This positive projection will hold true only if the property is rented out consistently to good tenants and if it does rise in value.

Other second mortgages are taken out in order to buy holiday homes to be used personally for years before being sold. Often, the anticipated sale is seen as an investment towards retirement.

The Nature of this Type of Mortgage

A second mortgage taken out on a home has some distinct characteristics. It is subordinate to the first mortgage so that in the event of a default, the first mortgage is paid off first. Partly because of this, second mortgages are generally considered riskier by lenders who will charge higher interest rates for it. Usually, a second home mortgage is taken out as a home equity loan so lenders will assess the available equity in the first mortgage before granting it.

These mortgages can be payable in thirty years or a year, depending on how the loan is structured. The holder of the lien on the second mortgage can foreclose when the homeowner defaults in payments for the second mortgage. This foreclosure can be accomplished even when payments for the first mortgage are up-to-date.

Mortgage Requirements

If you live in Rhode Island, you may want to contact embrace home loans RI to find out what the requirements are. Requirements for a second mortgage on a home are usually tighter than requirements for the first mortgage. Lenders usually need to see that there is substantial equity on the first mortgage and the debt-to-income ratio of the applicant is low. On top of that, a credit rating of about 725 is required along with a solid history of employment. What lenders want to see is whether the borrower can sustain payments independent of rental incomes or not.

Approval of a second mortgage taken out for purchasing a second home is also dependent on the property to be purchased. The second home should be a single-unit abode. It is to be occupied by the borrower for part of the year and is not to be placed under any time-sharing agreement. The second home should be a reasonable distance away from the principal residence of the borrower.
Managing Second Mortgages

You are generally charged higher interest rates for a second mortgage. Moreover, the fees involved in this transaction would probably be higher too. Perhaps the biggest risk of all with this type of mortgage is the possibility of foreclosure if you default on the first or the second loan.

An alternative to a second mortgage is to refinance the current mortgage on your home and get cash. This may enable you to buy the second house for cash or at least make a substantial down payment on the second home and incur a lower loan. At the same time, the bigger down payment or the cash purchase should help get a bargain.

If you find yourself wanting to buy a second home and needing to make a loan to buy it, the first thing you must do is get in touch with a reliable financial adviser who will help you weigh all your options to make your investment worthwhile. This way, owning a second home will be problem-free from start to finish.

 

IPIN Global: Strategic Investing For Everyone

property investment
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Investing in the property market is not something that everyone has the heart to do especially since the economic shakedown figured heavily during the recent years. IPIN Global makes property investing more strategic and significantly flattens investment risk through structured investment opportunities as well as a deep market intelligence bench. Tens of thousands of investors from all over the world coming from various backgrounds have been able to realize above market returns since 2004.

Since its inception, IPIN has gained its member’s trust and confidence as a preferred investment representative, negotiating and purchasing investment shares at terms that are most profitable for its members. Today, it continues to work towards maintaining exclusivity for its members and sustaining its growth by increasing customer value through the development of partnerships and proprietary investment models.

IPIN property investments come with minimum annualized return on investment (ROI) rates and deposit protection features. This kind of returns is made possible through property investment strategies by IPIN global. What particularly distinguishes IPIN property investing from others is that it takes a smaller number of investment opportunities in the property market but makes sure that these opportunities are well-researched and are backed by due diligence reports put together by reputable independent law firms.

In the network’s basket of opportunities are property investments that are competitively priced, are located in areas projected to experience continued appreciation in the property market, and are of minimal legal risk. People on the ground, so to speak, are engaged by IPIN in order to gain deeper understanding of the opportunities presented by different property markets around the world.

Geographic boundaries are transcended by IPIN global property investment strategies. Investors all over the world are able to ride on the vast resources of IPIN and its network. In a capsule, being a member of IPIN puts an investor’s finger on the pulse of the property market to allow him to make the right investment decisions on a basket of opportunities already screened and researched for him.

The proprietary strategies used by IPIN gives its members a unique and structured way to invest in the property market with minimum risks and maximum potential earnings. Signing up for IPIN membership is, in effect, like signing up for the services of an investment relationship advisor – exactly the kind of expertise that is needed by someone who wishes to cautiously dip his toes in the property market to build and sustain his wealth in a secure manner.