Refinance Rate for Second Mortgages
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A refinance rate for second mortgages can be higher than the rate for first mortgages. The second mortgage is riskier because in a foreclosure the second mortgage holder gets paid after the first mortgage is satisfied.Second Mortgage Loans - Your current financial situation and needs will help determine which type of second mortgage is right for you. There are currently two types of second mortgages available, fixed rate and adjustable equity lines of credit.
Qualifying for a second mortgage not only carries a higher interest rate but generally it will have stricter requirements as well. This is because of the fact that second mortgages are riskier investments than first mortgages. Even though second mortgages are usually smaller loan amounts and therefore there is even less money to lose than with a first mortgage, they are still riskier, and overall they generally end up losing more than a first mortgage company in the grand scheme of things.
Second mortgage interest rates are higher the farther into the equity of your home that you go. A second mortgage that is at 80% of the homes value will be lower then a second mortgage interest rate at 95% of the homes value. To determine your loan to value take the current value of your home and divide it into the total loan amount, the total loan amount is the second mortgage and first mortgage amounts combined. This number will give you the LTV or loan to value of your property.
Your refinance rate for your second mortgage depends on how long you would need that money. 30 year amortization periods are the standard, but should need the money for a fraction of that term, either 10 or 15 years, a balloon program can typically yield you a better rate.