125 Second Mortgages
How do you know if a 125 second mortgage is right for your families needs? It starts with a little research. 125 Second mortgages allow you to borrow up to 125% of the value of your home, essentially more than it’s worth. You do need a good credit rating but a lot of equity is not necessary.
The biggest lure for borrowers of a 125 second mortgage is you are able to take all your debt, and roll it into one low monthly payment, borrow up to 125% of the value of your home and some or even all of the interest on a 125 second mortgage can be written off. For example if you currently own $10,000 or more on credit cards, you can roll all of that money over into your home’s mortgage and be credit card debt free! A good rule of thumb is if you owe more then $10,000 in credit card debt and paying over 17% in interest – 125 second mortgage will probably be beneficial.
One thing to be aware of is to be sure to compare closing costs. They are as important as rates because they can be a hidden expense. So make sure to take a look at the APR. It calculates both closing costs and interest.
What are the risks of a 125 2nd mortgage loan?
When home prices are on the rise, 125% home equity loans pose little threat. Alternately however, if the housing market takes a sudden dip, those who accept 125% home equity loans will likely owe more than their homes are worth.
Underhanded lenders can offer 125% loans because it’s a win-win situation for the lender. If a homeowner defaults on the mortgage, the lender forecloses on the property. However, because the amount owed exceeded the home’s value, homeowners are obligated to pay mortgage lenders the difference.
This site is not a broker and does not collect or solicit mortgage applications. Content is for informational or comparison purposes only. Services are not available in New York. Products and services may not be available in all other states.