Usually when considering buying a home, the first question that comes to mind is not who you should approach to carry the mortgage on this home. Many people ask questions such as what “realtor to go through”, and “how high will the monthly payments going to be?” Rarely do they already have a banking institute or mortgage company in mind. The title company usually will have a list of banks they use, and will present your home purchase package to the banks to accept for the best offer.
However, there does come a time, when a homeowner considers to refinance or to take a second mortgage on the property they have purchased. As this homeowner ponders the question of refinance or second mortgage, he faces a vast choice of financial institutions to choose from and the choices are large in number.
A property owner of course should have a variety of questions as they are speaking to a banking loan officer to insure all questions are answered completely and advantages as well as disadvantages are understood before committing to this financial agreement.
As you consider this financial obligation, one of the most important questions to ask yourself would be; “Why do I want to either refinance or take a second mortgage?” The second question a person would want to ask is; “How important is this reason?” A final question to ask would be; “If something happens, will i be able to make payments without going into foreclosure, or losing this property?”
What is the difference between refinance versus second mortgage?
Refinance in simple generic terms is taking an old outstanding debt and replacing it with a different payment terms. A second mortgage typically refers to a secured loan (or mortgage) that is subordinate to another loan against the same property, and will depend on the equity value built into the home. Both refinancing and second mortgage options are not as simple as the definition. Borrowers should review the detailed terms of the options before making a final decision to commit to either of these choices. Consider the economy, consider property value, consider your employment stability and if something does occur, will you be able to continue to make timely monthly payments.