Reply by Nicole_NCali on 9/17/05 10:43pm
Msg #65878
it is that 80/20 factor. Some people qualify for financing at 103% and some people based on alot of factors qualify for 80 of the financing with one company and then the 20% is from another company. There is normally a subordination agreement and the interest rate on the second is higher than the 1st. Most of the people that we do the re-fi's for are consolidating this on one loan. The 80% is normally called the first and the 20% is called the second.
first mortgage
The mortgage that is in first place among any loans recorded against a property. Usually refers to the date in which loans are recorded, but there are exceptions
second mortgage
A mortgage that has a lien position subordinate to the first mortgage
home equity line of credit
A mortgage loan, usually in second position, that allows the borrower to obtain cash drawn against the equity of his home, up to a predetermined amount
check out this website:
http://content.realestateabc.com/glossary/
|
Reply by PAW_Fl on 9/17/05 10:54pm
Msg #65880
A 2nd is merely some type of loan secured by the same property as the first, but in the 2nd position. That loan can be a conventional fixed rate, ARM, fixed/ balloon, adjustable/balloon or some other combination of product that the mortgage company offers. The 2nd may also be a Line of Credit based on the equity established in the property. This is a HELOC or Home Equity Line of Credit and is an open ended type of loan, whereas the conventional fixed, adjustable loans are closed ended. Closed ended loans means that there is a defined finite ending period (15 years, 20 years, 30 years, etc.) and the principal is continually paid down. An open ended loan is like a credit card revolving credit. That is, you borrow against the equity up to some credit limit. As you pay your loan back, the amount you pay against the principal is returned to your available credit. For example, say you get a HELOC with a $100,000 credit limit, and you take an immediate draw of $40,000 to pay of your other 2nd mortgage and some other bills. That means you would still have $60,000 available credit to draw upon. As you make your monthly credit line payment, a piece of the payment is against the $40,000 you borrowed. Say, you pay back $10 in towards the balance (all the rest of the payment being interest). Then your principal balance would be reduced to $39,990 and your available credit would be increased to $60,010. Even if you paid the full balance, the "loan" would still exist because it is a credit line. With a closed ended loan, if you paid $10 towards the principal, it would simply mean that the balance due would be decreased by $10. There is no additional credit extended in a closed ended loan.
|
Reply by SLM_CALIF on 9/18/05 2:14pm
Msg #65924
Yep you're right the question was rather rudely put. However, I'm glad the question was posted, I learned a bunch of good stuff!.... Thank goodness for those of us who are willing to share the knowledge inspite of someone else's rudeness!.. Thank you ladies for the info!!!!!!
|
Reply by Blueink_CA on 9/18/05 3:27pm
Msg #65944
Thank's all for the responses. I didn't mean to sound rude and demanding, I guess my FBSS was showing (Forum Board Survival Syndrome!) My apologies. Anyways, thank's again for the replies and also for keeping me in check.
|
