Today Palm State Mortgage brings some guidelines concerning the advantages and disadvantages of taking on a second loan. Let’s begin with a working definition of a “second mortgage.”  It is a loan, and it is drawn against the equity in your home in addition to your first mortgage. There are two types of second mortgages:

1.  A Home Equity Line of Credit:  Known as a HELOC, this works a great deal like your credit cards. You will be allowed to make withdrawals from the money, as you need it. This is a variable rate loan.

2.  A Fixed Rate Home Equity Loan:  The more common, better known type of second mortgage is the fixed rate home equity loan.  A lump sum will be given to you, with fixed rate and a definitive repayment schedule.

Experts explain that a second mortgage is , “A consumer loan secured by a second mortgage, allowing home owners to borrow against their equity in the home. The loan is based on the difference between the homeowner’s equity and the home’s current market value. The mortgage also provides collateral for an asset-backed security issued by the lender and sometimes tax deductible interest payments for the borrower.”   Let’s break down that definition into details.

Guidelines To Your Second Mortgage:  Advantages

1.  Access:  This is a good way to obtain quick access to cash, and much less expensive than using a charge card to attain a sum of ready money for a big project like home improvement. Borrowing  money on a credit card or taking out a standard consumer loan will cost you much higher rates, plus service charges and mysterious hidden fees.

2.  Value:  Your interest rate will be favorable if your credit history is good, and the low rate climate continues.

3.  Taxes: The interest paid on mortgages might be tax deductible.

4.  Re-Boot:  Your home appreciates in values as time goes on, so your equity reloads itself.

5.  Closing:  A second mortgage is fairly inexpensive to close. It is your money, so choose the way you want to spend it. Common uses include home improvements, college tuition, debt consolidation,  or a once in a lifetime vacation.

Guidelines To Your Second Mortgage:  Disadvantages
1.  Temptation:  Because lending institutions will often make second mortgages fairly easily, you might be tempted to take out more than you actually need for your special project.
2.  Life Interferences:  Let’s look at some worst case scenarios. Suddenly you need to re-locate. Suddenly the real estate market goes soft. Due to changes in the neighborhood, your home depreciates in value. All of these thing can happen, and devastate your finances if you have used up all your equity. You could actually end up under the financial strain of owing more than your house is worth.  Find out more at this source, for those of you who wish to dig deeper into a little research.
3.  The Financial Climate:  Likewise, it is needless to say, if you have opted for a HELOC, and interest rates go up, you will also see your payments leap up, and wreck your monthly budget.

With second mortgages, we advise you to carefully check your monthly budget and your long term financial planning.  Let Palm State Mortgage help you find the monthly payment plan that works for you, if you choose a second mortgage. With careful planning, we’ll help you discover how a second mortgage can be a viable lending option to help you accomplish your financial goals.

We Are Wearing Our Pink Ribbons! 

We recognize and embrace awareness for the Breast Cancer Awareness Campaign this October.

Breast Cancer accounts for nearly 1 in 3 cancers diagnosed in women in America. By the end of 2013, an estimated 232,340 women will be diagnosed with invasive breast cancer, and 39,620 women will die from this disease. Every October, we are proud to honor the survivors, and remember those who have died.

Palm State Mortgage Company continues to support the ongoing advocacy and research sponsored by this campaign.   You need not run races or spend a fortune to show your support. There is a very simple way to be a part of the pink ribbon cause:  Ask the women in your family if they have taken their mammograms for 2013.