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Option One Mortgage
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Financial Literacy
Who Should Take Out a Mortgage?
The Monthly Payment
What is a Second Mortgage?
Take Out a Second Mortgage?
Home Equity Line of Credit
Preparing to Apply
The Down Payment
Fixed vs. Variable Rates
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What is a Second Mortgage?

Option One Mortgage believes that consumers in the market for a second mortgage loan should educate themselves about what is involved before making a decision.

When a consumer takes out a second mortgage loan or “home equity loan,” it is usually based on their home’s market value. Therefore, an assessment of such will usually be required. In some cases, the equity in the home is a consideration, as well.

Equity is understood as the difference between the home’s market value and how much you have yet to pay on the house (that is, how much you still owe on your first mortgage loan). If your home is worth, for example, around $300,000 if sold today, and you still owe $150,000 on the original mortgage, your equity in the property is around $150,000.

What is important to understand about a second mortgage is that it means that, in addition to the lien held on your house, there will now also be a secondary claim, as well. The lien is in association with the first mortgage loan while the claim is a product of the lending institution financing your second mortgage loan.

Option One Mortgage reminds consumers that should they default on the terms and conditions of a second mortgage loan, there could be serious consequences. While a home equity loan is a legitimate way for homeowners to access cash when they need it, it is not a source of “free” money. The money must be paid back, with interest.

If you choose a second mortgage loan originated by Option One Mortgage, your loan officer will work with you to make sure you understand the financial obligations and consequences of any loan agreement you make.

 

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