Debt Consolidation Second Mortgage Loan

A debt consolidation second mortgage Loan can be a very useful tool if you have a low rate first trust but still want to use some equity in your home to pay off high cost credit card or other debt. You should leave your first alone if your existing first trust is at a rate lower than today's market.

Some useful Second Trust programs include:

1)A traditional second will allow you to borrow up to 95% of your appraised value including your first trust. The program will allow a debt to income ratio of up to 45%-your monthly pretax income divided by your total debt. If your ratio is too high, you can have some debt paid at closing so we do not need to figure that debt in the ratios.

 2) An expanded traditional second trust will allow you to take out up to 100% of your appraised value. Please note that your interest rate will increase as the loan to value increases. Borrow what you need but only as much as you need to get rid of the debt.

3) A 125% second trust will allow up to 125% of the appraised value of your home. Take the value of your property, multiply by 125% and then subtract the balance of your first trust. The result is the total you can borrow. Interest rates can increase significantly when you go "over equity" as the lender is making a loan with no collateral (you owe more than the home is worth today) but many consumers find their monthly payments reduced significantly. With the recent increase in values expected to continue, many homeowners will see enough increase in value to cover the amount borrowed in a very short time. Not available on investment properties at this time.

4) A stated income second trust is available. We  verify your employment but no attempt is made to verify your income. The rate is increased by 1/2 to 3/4 % but the loan is a useful tool for many.

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