Christian Second Mortgage Companies
Christian second mortgage companies are slightly different in makeup than banks and credit unions that offer these lending agreement instruments. A second mortgage lending agreement is a either a home equity loan based on the amount of equity that is in a place of residence or a lending agreement to cover the down payment requirement in order to get a better loan offer. In either case, either second mortgage companies or banks and credit unions are the sources, depending on one's own financial situation and need. Each lending entity has its own personality, its own set of lending guidelines and varying standards of risk threshold. Knowing how each works is important in getting all the information someone needs in securing a 2nd lending loan on a property. "Bless them that curse you and pray for them that despitefully use you." (Luke 6:28)
To begin, the biggest difference between banks, credit unions and second mortgage companies is in risk management or a lessened degree of the same. Banks are governed by the policy of guarding and taking care of depositors' monies. Thus a high degree of conservative practices are usually a part of their standard operating procedure. In general, because only the lowest risk borrowers are approved by banks and credit unions, these lending institutions generally offer the lowest rates on interest for lending agreements. But they do have the highest standards for borrowers that include a credit score above average and a low debt to income ratio. Since the average credit score recently in America is about 620, banks and credit unions like to look at those persons with a borrowing history rated at 640 or above, although this is not a hard and fast rule. Secondly, the ratio between all monthly debt or credit payments, including the house payment and a person's or couple's monthly income cannot be above forty percent, and preferably lower.
Just because a borrower is turned down by a bank or credit union does not mean that there cannot be a lending agreement in his/her future. The opposite of banks guarding their depositors' monies are second mortgage companies who do not have depositors to guard, but do have high risk investors who aggressively go after poorer risk borrowers with lower credit scores and higher debt to income ratios. It would follow that their lending agreements would have higher interest rates and perhaps more points on lending agreements. So mortgage companies and loan companies that are often found in strip malls and have nationally known names behind them are these types of lending companies. So who needs a 2nd mortgage?
Consider a young couple just starting out life together and who want to buy a modest house. The couple's parents gave them a total of ten thousand dollars at their wedding for a down payments, but the loan they can most afford, a fixed rate at six and a quarter percent requires twenty percent down. The hundred thousand dollar house will mean that they must come up with ten thousand more dollars somewhere to make the loan happen. The bank where they will get the first house loan will not give them a second loan, so the couple ended up at one of the many second mortgage companies to get a secured personal loan for ten thousand dollars. Both husband and wife have newer cars that are paid off, so this will be the collateral for the second mortgage lending agreement. What the husband and wife do not know is that this borrowing agreement has jumped their debt to income ratio above forty percent because of some credit cards each one has and the bank agreement will now probably tank. Easy credit is not necessarily a good thing for everybody.
Then there is the couple who need a second mortgage for home repairs. The foundation on the duo's house is beginning to crumble and will cost over twenty thousand dollars to fix. The couple knows they don't have great credit scores because of some missed or late payments over thirty years of marriage. The forty thousand dollar house that was purchased thirty years ago is now worth almost two hundred thousand dollars and they only owe four thousand more on the mortgage. The bank is still being a bit squeamish about giving them money because of their credit scores, so a second mortgage, sometimes known as a home equity loan, will be sought by one of the nationally known second mortgage companies that actually even offer first mortgages also.
The couple finds out that second mortgage companies are happy to take the twosome's loan application because there seems to be little risk since almost the whole house is already paid off. The husband and wife apply for a twenty five thousand dollar home equity line of credit, and roll the cost of the loan into the money received. The couple will pay four points for the loan which will cover all of the costs and a variable interest rate of about eleven percent, quite a bit higher than the bank. The older couple will have about four thousand dollars left over from the foundational home repair and will go take a cruise to Alaska to celebrate the foundation being repaired. Second mortgage companies do charge more for loan services, but in some cases provide a great alternative to crumbling foundations. An alternative to society's philosophy comes from Jesus when he said the happiest people are those who mourn over sin, the happiest people are those who are meek, the happiest people are those who are persecuted for faith in Christ, the happiest people are those who are truly hungry to experience righteousness in life.
Christian Second Mortgage LenderFor the homeowner, a second mortgage lender can make all the difference in times of financial crisis. Mortgages of this nature are generally considered secondary loans to the original loan that was used to purchase a piece of real estate. The home or property will serve as the security for both loans. This secondary position means that if a borrower fails to make payments on housing loans and sends the loans into default, the first loan that is to be paid off is the original mortgage. It is possible for one property to have more than one lien against it as long as the value of the property merits it. The amount of money that can be loaned is determined by the amount of equity that a property can claim. Some properties have been known to have multiple mortgages, perhaps three or four. A second mortgage lender is allowing a property owner to borrow against the appraised value of the home. The length of time that a borrower has to pay back these mortgages can vary. Some are paid off relatively quickly and some might extend for a decade or more. Of course, there are disadvantages to think about any time that multiple mortgages are considered since a home's valuable equity will be impacted.
There are certain requirements that a second mortgage lender will be looking for when a borrower fills out an application. Lenders will generally check to make sure that the property involved has plenty of available equity. The equity is determined by comparing the amount of money that is still owed on the property and the home's current market value. The difference between these two figures constitutes the equity. Another question that lenders will ask is how high is the potential borrower's debt to income ratio? What kind of credit score can the home owner claim? Does the borrower have a healthy and responsible work history? All of these qualities tell a story about the home owner's likelihood to be able to pay back any loans that are made. The higher the likelihood that a borrower can pay back the debt, the less risk is involved for the second mortgage lender. Lenders will usually charge higher interest rates for secondary mortgages as well as expensive closing costs. Some of the common reasons that a homeowner will investigate the possibility of borrowing against a home's equity could include home improvement needs, debt consolidation, or unexpected life events.
New home buyers may also take advantage of the secondary mortgage option. Frequently, a new home buyer will have only a small amount of potential equity when purchasing a property. This means that the buyer must pay for private mortgage insurance. By financing the property using two loans, a primary loan and a secondary one, first time buyers can avoid the monthly expense of private mortgage insurance. Many second mortgage lenders will make this option available to potential borrowers who are applying for a home loan. Another option in secondary mortgages is the home equity line of credit. This line of credit is used at the borrower's discretion. The homeowner may not wish to cash out all of the equity that they have in their home, but would prefer to draw on it when and if it is needed. Consumers who have credit that is at the top tier of the ratings may also be able to borrow against a property in excess of that property's value. As would be expected, these types of loans can be somewhat hard to obtain. The Bible talks about the importance of the Word of God. "But the word of the Lord endureth for ever. And this is the word which by the gospel is preached unto you." (1 Peter 1:25)
Any consumer who is shopping for a potential second mortgage lender should keep a variety of things in mind. There are lenders who could be classified as predatory. These institutions can end up extracting a high toll from potential borrowers. Predatory lenders will often zero in on borrowers who have credit issues and who believe that dealing with these lenders is the only way that they can own a home or obtain secondary financing. Unfortunately, such borrowers often find themselves in over their heads and unable to make loan payments, putting their homes at risk of foreclosure. Anyone who is considering secondary mortgages should do careful research before proceeding. Careful homework and comparison shopping are always a good idea before going into debt or placing a home at risk. By talking to several lenders and comparing the terms that they offer, a buyer can make a wiser decision. If, after taking out a second mortgage, a borrower believes that they have made a mistake, the borrower actually has three days under federal law to cancel the loan. Other things to look out for when shopping around for a second mortgage lender are the presence of expensive default penalties that could increase interest rates in the event of a late payment, heavy prepayment penalties, and mortgages that have extra insurance policies mixed in with the terms of the agreement.
Among the disadvantages of secondary mortgages, aside from the fact that the Christian borrower is putting their home at risk, is that there can be additional fees and services that the borrower will have to pay for. A wise consumer will make sure that the second mortgage lender explains all of the terms of the loan in a way that the borrower can clearly understand. It is also a good idea to make sure that the reason for taking out a secondary mortgage is a solid one and not for frivolous purposes.