There are many different reasons why homeowners who already have a mortgage would consider getting a 2nd or 3rd mortgage on their home. These types of loans can be used for home renovations, medical bills, college tuition, or even to consolidate debt — but how do 2nd and 3rd mortgages work?
Homeowners who take 2nd or 3rd mortgage loans use their home as collateral. These types of mortgages work as home equity loans and allow homeowners to borrow money from the total equity of their home. This means they won’t have to refinance and break their current mortgage.This is very beneficial when the existing mortgage rate is too good to give up.
Additional mortgages are always taken against the equity of a person’s home, although the amount that the 2nd or 3rd mortgage lender offers all depends on the equity that has been built up in the home. Generally, second and third mortgages do not exceed more than 90% of the value of the property.
How do I Qualify?
To qualify for a second or third mortgage, homeowners must firstly own a property. Mortgage lenders will calculate the equity available in a person’s home to determine how much they qualify for. When calculating the equity available in a home, lenders subtract the homeowner’s remaining mortgage balance from the current market value of their home.
To determine the eligibility and interest rate for a second or third mortgage, lenders also take the following into consideration:
- Property value
- Total equity of home
What Are the Benefits of 2nd or 3rd Mortgages?
2nd or 3rd mortgages have many different benefits. They provide homeowners with easy access to cash fast, they offer freedom and flexibility, are considered safer by lenders, and generally have lower interest rates than unsecured loans —.
Apply for a Loan with Us Today!
If you are wondering how to get a mortgage with bad credit, or are wondering if you qualify for a second mortgage, contact us today. With fast mortgage approval and instant mortgage pre approval, Quick Equity Loans can get you the loan you need.
Stress tests do not apply to our borrowers. If you have bad credit or low income, you can still qualify for an additional mortgage as long as you have enough available equity in your home. You may also qualify for instant mortgage approval. Use our easy home equity calculator to find out how much you could qualify for, and contact us today for more information!