Most of us who own our homes have a mortgage

Most of us who own our homes have a mortgage - as a down...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Most of us who own our homes have a mortgage. Usually, when you buy a home you are required by the bank, or lender, to have about a 20% down payment. In other words, the mortgage lender requires that there be a good amount of equity in the home at the time of purchase. Of course there are exceptions to this rule and there are many lenders who will allow less equity, depending on the products they have available at the time. Moreover, when buying a home you can always attain a second mortgage. A Second Mortgage When Buying Your Home When you first come to purchase your home you have the option of seeking a second mortgage. Depending on your credit score and income levels you may qualify to barrow a large portion of the purchase price. In some cases you can borrow nearly 100% of the total value, although this is now rare. Loss of Protections or Gain of Risk Second mortgages can be great. They save you from having to put down a large sum of cash
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Background image of page 2
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: as a down payment when purchasing a home, and theyre great when you need money to fix up your home or send the kids to college. However, they come with costs and risks. With a second mortgage usually comes unfavorable terms or rates. Most second mortgages are adjustable rate mortgages which leave you at risk of increased monthly dues after a certain amount of time. In addition, by taking out a second mortgage you are cashing out your equity, which puts you at risk in case of an unforeseen event where you may be forced to sell your home. Second Mortgage Come Time to Sell If you need to sell your home for any reason, like job relocation, the market price of you home may not be able to cover both your first mortgage and your second. In other words, the amount of debt you owe on the house is more than it is worth. META Description: With a second mortgage, the equity is no longer there to protect you from unforeseen situations....
View Full Document

This note was uploaded on 03/06/2010 for the course ART 121 taught by Professor Mack during the Spring '10 term at Academy of Design Tampa.

Page1 / 2

Most of us who own our homes have a mortgage - as a down...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online