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Financing small mortgages
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Trying to find financing for a small mortgage or home equity loan can be hard to find.Many lenders have minimum loan amounts. A knowledgeable and experienced mortgage broker will know which lenders have no minimum loan amount and be able to help you get approved.
Lenders often have underwriting ratios that prevent them from making small loans. Usually its a 5 to 1 ratio. That is the first mortgage cannot be more then 5 times the balance of the proposed second mortgage.
Many lenders nowadays have minimum loan amounts for first and second mortgages. The most common minimum loan amount on first mortgages if $50,000. For second mortgages the most common minimum loan amount is $10,000. There are lenders that will allow financing on smaller loan amounts but don't be surprised if you have a slightly higher interest rate for financing that smaller loan amount. The main reason for the higher rate for a smaller loan amount is because the risk versus reward benefit is not as abundant for lenders on smaller loan amounts as it on bigger loan amounts.