When It Comes To Refinancing You Have Choices

 There are several types of second mortgages that homeowners can consider based on their financial needs and goals. Here are some common types of second mortgages:

1. Home Equity Line of Credit (HELOC): A HELOC is a popular type of second mortgage. It provides homeowners with a revolving line of credit that they can borrow against as needed, up to a predetermined credit limit. The borrower can access funds during the draw period, usually around 5 to 10 years, and make minimum interest-only payments. After the draw period ends, the repayment period begins, during which the borrower must make principal and interest payments. HELOCs often have variable interest rates tied to a benchmark such as the prime rate.

2. Closed-End Second Mortgage: A closed-end second mortgage, also known as a home equity loan, is a lump-sum loan that is disbursed to the borrower upfront. The borrower receives the entire loan amount at once and repays it over a fixed term through regular monthly payments. Closed-end second mortgages typically have fixed interest rates, providing stability in repayment amounts.

3. Cash-Out Refinance: A cash-out refinance involves replacing the existing mortgage with a new one that has a higher loan amount. The homeowner can borrow against the equity they have built in their property and receive the difference in cash at closing. The borrowed funds can be used for various purposes, such as home improvements, debt consolidation, or other major expenses. The homeowner repays the new mortgage through regular monthly payments.

4. Second Mortgage for Down Payment (Piggyback Loan): A second mortgage can be used as part of a piggyback loan structure to avoid paying private mortgage insurance (PMI). In this scenario, a borrower takes out a second mortgage to cover a portion of the home's purchase price, typically 10% or 15%. The first mortgage covers the majority of the purchase price, usually 80%. The borrower contributes a down payment, typically 5% or 10%. This structure helps borrowers avoid the cost of PMI when the down payment is less than 20%.

For more information about delayed financing please reach out to one of our experienced mortgage advisors. 

Park Place Financial Group

Joe Costa

Marni Wolf

402 West Broadway

Suite 400

San Diego, CA 92101

619-990-7552

info@parkplacefg.com

www.parkplacefg.com