There are plenty of mortgage industry terms (jargon) that you should be aware of, and one of these is the phrase “second mortgage.” What does it mean when someone is applying for a second mortgage in Austin, TX? We share, in this post, some things about a second mortgage, which you can peruse when you apply for this type of mortgage.
So, without further ado, here are some facts about the second mortgage in Austin, TX:
- A second mortgage loan is another term for a home equity loan, which allows homeowners to borrow money using the equity of their homes as collateral;
- Like any other mortgage, you pay for a second mortgage monthly, including the interest and relevant fees; therefore, you have to make sure that you can afford payments for a second mortgage loan on top of the original monthly mortgage payment.
- Homeowners apply for a second mortgage loan to pay for major expenses such as college tuition, medical bills, repair or renovation, new vehicle purchase, and more;
- Under Texas state law, 80% of the total appraised value of the property is the maximum amount that you can apply a second mortgage for;
- You can take out a second mortgage on your primary residence. However, a lender cannot issue a second mortgage if an outstanding balance remains.
- If you only need a small amount of cash, a second mortgage may not be the best option. That is because charges such as closing costs, recording fees, origination fees, and loan processing fees can add up.
- Texas state law also specifies that borrowers can only receive one home equity loan per calendar year, even if they have completely paid off a previous loan.
- You increase your chances of getting a second mortgage if you earn enough income to pay back the loan, increase your equity, have a credit score in the mid-600%, and have a reliable payment source.
- Since home equity is the core basis for second mortgage approval, it makes sense that you work on it. You can build home equity by putting a larger down payment, making accelerated payments, and increasing your property value by making updates, fixes, or improvements.
Online looking for a reputable company to help you with your application for a second mortgage in Austin, TX? Talk to an expert at Mortgage Homeplus today.