What Are Second Mortgage Loans

A second mortgage may come in handy and help you out of a jam when you are strapped for cash. A second mortgage as the name suggests is a second loan taken on another property. It means that the property that the loan is taken against already has a mortgage on it. So how does a second mortgage work? Is there any advantage to taking out a second mortgage? These are the question that we will answer in this article. We will try to understand the concept of second mortgage loans and what you should consider before you decide to take out a second mortgage.

When a person has already taken out a loan on a property and he takes out another mortgage against the same property then the new loan is called the second mortgage loan. The second mortgage loan is subordinate to the first mortgage. This means that if something happens and you are no longer able to pay your mortgages then after foreclosure the first mortgage would be given priority, once that has been paid off then the money left over is used to pay the second loan. This is why second mortgages are considered to be more risky by lenders. If you stop making payments for the second mortgage the lender of the second loan has the right to foreclose even if you continue to pay the first mortgage. If you stop paying your first loan and the lender for your first mortgage forecloses then your second mortgage will be cleared of from any money that is left over. A second mortgage is usually taken out on the amount of equity you have on your house. To better understand what this means lets take a look at an example. Suppose that your home is evaluated to be $75 thousand and you take out a first mortgage loan against this property. You then start paying this mortgage off a few years later you find your self in the need for more money. By this time you have already started paying off your first loan and the balance left on it is $60 thousand. This means that you have paid $15 thousand and thus own that much of the house. This fifteen thousand is considered as your equity. You can take out a second loan on this amount. Another situation may be that you have taken a first mortgage of only $50 thousand even though your house was evaluated at $75 thousand. In such a case you can consider getting a second mortgage loan.

Second mortgage loans can be very handy if you are in need of extra money or want to consolidate your debt. The interest on a second loan is always higher than that of the interest on the first mortgage however it may still be lower than the interest of some other loans like credit cards etc. You should take care when you are looking at second mortgage loans as you will be putting your house at more risk. Try to get a second mortgage loan that has a fixed interest rate.

Mortgage Amortization Schedules

According to e-AmortizationSchedule.com mortgage amortization is the reimbursement of principal from scheduled mortgage payments that exceed the interest due. The scheduled payment paid by the borrower less the interest equaling amortization. The loan balance declines by the amount of the amortization, plus the amount of any extra payment. Negative amortization occurs when the scheduled payment is less than the interest due whereby the balance goes up.

The Fully Amortizing Payment on FRM and ARM:

The fully amortizing payment is the monthly mortgage payment that will eventually pay off the loan at term. On a fixed rate mortgage (FRM), the fully amortizing payment is calculated at the outset and remains constant over the life of the loan. On the other hand, on an adjustable rate mortgage or ARM, the fully amortizing payment is constant only when the interest rate remains constant. The fully amortizing payment changes only when the rate changes.

Standard Mortgage Amortization:

In a standard mortgage, tax and insurance payments are shown in the amortization schedules, if made by the lender and the balance of the tax or insurance escrow account. Strict and rigid rules apply in the payment requirement regarding the standard mortgage. Even if a single payment is missed the late charges accumulate until the payment is made up.

Simple Interest Mortgage Amortization:

The interest is based on the balance of the day of payment on a simple interest mortgage, which is calculated daily. If payment were made on the first day of every month in both cases, it would come out the same over the course of a year. However, if a payment were late staying within the usual fifteen-day grace period under the standard mortgage scheme, one would do better with that mortgage.

Reverse Mortgage Types

In United States of America, there are basically three types of Reverse Mortgage; namely, federally insured, single purpose, and proprietary. To know which one will be helpful to you let's discuss them one by one.

Federally Insured Reverse Mortgage

This type of loan is commonly known as Home Equity Conversion Mortgages (HECM). This type of loan is costlier type of loan. It is suitable for homeowners who prefer to stay in home for longer duration. If owner is planning to stay in home for shorter duration, then upfront cost can be really very high. These types of loan do not have any special requirement and are available anywhere.

Single-Purpose Reverse Mortgage

This type of credit is being offered by the state government, local governing bodies and non-profit society. This type of loan is not easily aware and there are possibilities that it is not prevalent in your city also. Hence, check for it once. The single-purpose reverse mortgages are of very low cost and are good for people with low or moderate income. These funds are used for

* Home improvement
* Property taxes
* Health expenses

Proprietary Reverse Mortgage

This type of credit can be availed from a private bank or any company offering this service. They do not include any type of social security or medical benefit. It is the easiest form of getting the loan against home.

As per your requirement you should take the loan. But still if you are in dilemma of knowing which one will suit your needs better call a reverse loan advisor. Especially in Texas, you can find various Texas reverse mortgage agents take their help. But it always wiser to go for an experienced Reverse mortgage Texas mortgage advisor. He will guide you in the right direction by telling which type of loan is suitable for you. Further they will tell you the eligibility criteria, advantages and disadvantage of taking the credit.

For more information on Texas reverse mortgage, visit http://www.reversemortgagerx.com

Article Source: http://EzineArticles.com/?expert=Manoj_Salwani

Texas Reverse Mortgage Purchase Not Approved

Since the Texas constitution contains technicalities that prevent this on a home in Texas, there is not a true HECM for Purchase in that state. In the future, legislative changes and Constitutional amendments may make the HECM Purchase possible, but that could take as long as 3 years from now. Seniors must consider other options if want to buy a new home.

The reverse mortgage is a great benefit to seniors who own their own home but need more money than their social security provides them, and the HECM is a program that allows seniors over the age of 62 to purchase a new primary residence using the proceeds from a reverse mortgage. The program has been around since 1989, but it is only recently that the FHA, a division of the U.S. Department of Housing and Urban Development (HUD), approved the HECM for its purchase program. This means that seniors have a government insured option for buying their home. The HECM for Purchase takes the reverse mortgage a step further and puts that money directly toward the purchase of a new home that is more suited to their needs, such as closer to family or more manageable in size.

The Texas constitution does not allow the purchase program because it stipulates that the homeowner must already be on the title of the property prior to taking out a reverse mortgage. Instead, a senior homeowner could purchase their home, then pay themselves back using the proceeds from a standard Reverse Mortgage. There are some stipulations that could prevent this action, though, such as seasoning requirements of 3-12 months required by some lenders.

There are a few other options for seniors in Texas, besides the HECM for Purchase.

They can still obtain a reverse mortgage as homeowners in other states can. The reverse mortgage can help seniors who are struggling to manage their rising medical bills and other expenses during their retirement on top of mortgage payments. The program allows these homeowners to convert equity in their homes to a tax-free income, without mortgage payments, and without the risk or reality of having to sell their home or sign over the title.

Opportunities for Reverse Mortgages are greater than ever right now, and seniors in Texas should not feel discouraged because of this one technicality. They should look at the alternate solutions for reverse mortgages. In fact, the U.S. Department of Housing and Urban Development (HUD) recently raised the reverse mortgage limits to $625,500 to help stimulate the economy and provide immediate relief to senior homeowners facing unaffordable payments.

If seniors in Texas can wait a couple of years, their options for reverse mortgages will continue to increase to the same options that seniors in other states have. As of now, there is a lack of verbiage in the Texas State Constitution to allow HECM for Purchase. Because we have to amend the State Constitution to be able to offer HECM for purchase, the earliest an HECM for purchase in Texas would be allowed is 2012. The Texas Legislator only meets approximately once every 14 months, so the quickest this can be brought to a vote is in 2010 for a 2011 ballot.

Article Source: http://EzineArticles.com/?expert=Robert_Griffin

Top 3 Florida Mortgage Lenders

Mortgage companies in Florida are professional and regulated organisations involved in the business of money lending to prospective clients who may be looking to purchase a property. The Florida mortgage market though has taken a bit of a beating over the last couple of years with the credit crunch, so times are harder for buyers if they haven't got a large deposit or particularly good credit. However, there are always companies looking for new business and if they found your circumstances and application to be favourable then they will be happy to move forward with your application.

The mortgage lenders can act as agents between the client and lenders or specifically as the lender itself, dependent on the circumstance. They can also offer refinancing options for current homeowners who may be looking to free up some of their capital in the short or long term. Either way, you should be looking to speak with a reputable Florida mortgage lender so ask your local realtor if he has any recommendations to offer. In the meantime here are the top 3 Florida mortgage lenders in no particular order.

1. Florida Mortgage Corporation. These guys were established in 1989 and is a member of the better business bureau and hold an A* rating with them. They have all manner of solutions regardless of your circumstances. Definitely worth looking at when trying to find a Florida mortgage lender.

2. Transcon Lending Group. This company offers a huge variety of mortgage options from 100% mortgages, reverse mortgages, refinancing and much more.

3. Mark Foreman Finance. This company specialises in providing Florida mortgage lending to expat buyers. The expat level of investment in Florida accounts for a significant percentage of the total business so I though it relevant to include some specialist expat FL mortgage lenders. These guys are in face America's No1 mortgage broker for expat buyers.