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What is a stated income second mortgage? A stated income second mortgage is one that does not require the borrower to prove income stated on the application. This is most advantageous to self employed and contract workers who receive a 1099 instead of a W-2 as they would have a difficult time proving their income. Stated income mortgage loans are the most commonly used and usually the least expensive of the no documentation types of mortgages.

Mortgage lenders understand that it is difficult for individuals who are self-employed or operate a one-person firm to verify their income. Different types of no income loans are offered including state income or no income verification loans.

Inquiries should be made to a loan officer as to the types of reduced documentation information required to secure the loan. Lenders may require anywhere from 3 to 6 month reserve for principal interest taxes and insurance (p.i.t.i.). If the monthly p.i.t.i. payment is $ 2,000 a month; the lender may require proof of assets anywhere from $6,000 to $ 12,000.

A fixed rate second mortgage is a way to refinance higher adjustable rate second mortgages or home equity loans. If the interest rate on the second mortgage is below the adjustable rate, lower payments monthly would be a benefit of the second mortgage.

Home equity loans can serve a number of purposes. They can be used to reduce credit card debt, consolidate high interest credit lines, make home improvements and pursue educational endeavors.

Stated income lines are available to all borrowers but the lenders usually require the borrower to have a minimum credit score. The higher the credit score the better the interest rate offered.

A stated income second mortgage loan is suitable for borrowers who have no verifiable income and have assets to meet minimum reserve requirements of the lender. The stated income on your application must be reasonable in terms of your assets. Qualifications for no income verification loans require the borrower to have a minimum credit score. While it varies from lender to lender, most lenders will require the borrower to have a credit score above 580.

The lower the credit scores the higher the interest rate the lender will require. If your credit score is high you may be able to take advantage of a fixed rate second mortgage before the interest rates increase above 7%.

Consideration is usually given to the tax consequences of the different types of loans. A tax adviser should be consulted before a borrower commits to a mortgage whether he is a first time buyer or an experienced homeowner refinancing.

Words can be fun. English words are particularly interesting as they are born from a variety of sources. Although it is a Germanic language, about 50 percent of English is based on Greek and Latin. Have you ever thought about the origins of certain words? Take the word “phony,” for example. British crooks once used different secret code words. On of those was “fawney,” which alluded to a gift ring. The thieves would sell these rings, claiming that they were made of actual gold. So, the word “phony” began to refer to anything that was unreal. Another interesting word origin is connected to the word “hazard.” This is derived from the Arabic term, “al zahr.” What does it mean? The dice. The term became related to several games that used dice, in Western Europe. They learned these games during the Crusades, which took place in the Holy Land. Later, the word became associated with danger, because some people cheated with adjusted dice, and gambling was always a risk. Similar to the examples given previously given, a second mortgage home equity loan may also seem complicated. But it is actually fairly easy to learn when it is broken down.

Mortgage Meaning
How about the word “mortgage”? “Mort,” meaning “dead,” is from the Latin “mortuus.” The word “mortgage” itself is from the Anglo-French word with the same spelling. But why would death be related to a mortgage? Sir Edward Coke, who was born in the 16th century, believed that it was based on whether or not the mortgager would pay his debt. If the person could not pay his debt, then the land was taken from him, and became dead to him. But if the person paid off the mortgage, then the mortgage owed became dead to him. That helps to explain how a second mortgage home equity loan works.

One Debt, Two Loans
So what’s the meaning of a second mortgage home equity loan? This type of loan is useful in restructuring your debt. Applying for this loan is much simpler than applying for the original loan. To secure a second mortgage home equity loan, you must have good credit and be capable of documenting your income. And while zero or no-equity loans let you borrow a maximum of 125 percent of your home’s value, be cautious. Those loans have interest rates that are higher, and have stricter standards for qualifying. Two types of home equity loans exist. A home equity loan is a lump-sum loan that, like the majority of first mortgage loans, requires regular payments. However, the closing costs of a second are lower than those for a first mortgage loan. The fixed rates for home equity loans are a little higher than the rates on first mortgages.

Hello, HELOC
The home equity lines of credit, or HELOC, are another type of potential second mortgage home equity loan. The differences include:
* The account can be used as long as funds are available. Think of it like a credit card, with a balance and an available credit line.
* The interest rate can change each month. So this type of second mortgage home equity loan is ideal when low interest rates are available, but are hazardous after interest rates increase.
* After a future time, such as 5 to 20 years, you cannot draw against the account any longer. You will then have to make monthly payments on the loan’s principal and interest.

Words can be fun when we know what they mean and where they come from. Likewise, the second mortgage home equity loan can provide several options after you have mastered what it is.

How To Choose Your Home Equity Line Of Credit Loan

When it comes to getting the equity out of your home, one of the best tools available may be the home equity line of credit (HELOC). While not for everybody, it can provide you with the equity in your home, access to cash, and a way to choose how much money you use. Not every HELOC plan, however, is equal. Here are some things to look for when you start looking for your mortgage.

Home equity loans are a great way to take advantage of the equity in your home. Since you are not paying interest on all of the money only on what you use, it creates a handy way to use the equity – when and if you need it. During the draw period, you have free access to the money.

Before you sign the agreement for a HELOC, however, you need to know that it is basically a second mortgage. This means that it will add another payment each month and you need to know in advance how much it will be. You should be able to comfortably make the payment without it being difficult or creating too much of a financial strain.

As a second mortgage, you will also have various closing costs and other fees added when you sign for the loan. Among these, you will also usually find an appraisal fee, a surveyor’s fee, originator fees, and more. Some of these may be waived, but you will need to know what each of the fees is for. Some lenders are now charging few fees but you may need to look around.

Monthly and annual fees may also apply – depending on the particular lender. You need to look carefully at each of the fees to make sure you understand exactly what each fee is for.

The interest is also another thing that you should pay close attention to. Home equity lines of credit are most often adjustable rate mortgages which means that the payments are flexible and will frequently change. Find out how often the interest rate is calculated in order to get the best rates. It is not uncommon for the rates to be calculated on a daily basis, and sometimes it is on a monthly time frame.

Many HELOC’s also have what is called a margin, which is basically another interest above the interest rate (APR). The thing about this is that you will usually not be told what the interest rate is – unless you ask about it. There could be quite a variation in the margin rates – so be sure you ask, and do not take it for granted that it will be low with that particular lender.

You will also want to know how the home equity loan will be amortized. Some of these have balloon payments that are due at the end of the draw period. Your only option may be to refinance at that time. Oftentimes, though, your amortizing payments are set up at the end of the draw period, and you simply start paying till the loan is paid for. Check to see if you have the option to automatically renew your home equity line of credit, too, since some lenders will do that for you.

If you are looking to take advantage of the money accrued in your home, 2nd mortgage home equity loans are worth looking into. You can use the equity in your home to do some home improvements, take a vacation, or pay off some of your other debts. Getting a 2nd mortgage home equity loan can be a great way to get a little extra breathing space financially, and take advantage of your most valuable asset.

What is equity?

Simply, equity is the amount of ownership you have in your home. When you first get a loan, the lender basically owns the house. As you make payments, and as your home increases in market value, you start to own more and more of your home, and the bank owns less and less of it. The amount that would be left if you were to pay off your mortgage home loan today is the equity. 2nd mortgage home equity loans are a way to take advantage of the cash value you have built up in your home.

Using the money from 2nd mortgage home equity loans

There are many things that you can use the money for when you take advantage of a 2nd mortgage home equity loan. This is because the money that results from such a loan is yours. Here are some things that many people use the money for:

Home improvements. Many people make expensive repairs and upgrades with the money from a 2nd mortgage home equity loan. Home improvements add to the homes value, and can increase the amount of equity in the home.

Vacations. Some people make it a point to go on vacation when they have equity built up. This is because many people feel that they deserve a nice break after working so hard. Using the money for a vacation can be a rewarding experience in some cases

Consolidating debt. If you have a great deal of consumer debt, especially credit cards and medical bills, 2nd mortgage home equity loans can help you pay them off. You can consolidate your debt into a single, lower monthly payments and interest rate. Plus, most home equity loan interest payments are tax deductible!