Colorado, or also known as the "Springs" is one of the nicest states to live in. Perfect winter conditions in most of the cities, and beautiful springs. Colorado is home to many modern cities, and a diverse culture. Many people are interested in moving to Colorado, but few are aware of the idea of having a second mortgage. A second mortgage is a second loan that is subordinate to another loan on he same property.
The first mortgage is paid before the second one, making it more of a risk factor. In most cases a second mortgage takes the form of a home equity loan. Generally when you apply for a second mortgage lenders look for these 4 things; significant equity in the first mortgage, low debt to income ratio, high credit score, and a solid employment history.
Most lenders look at the equity of the first mortgage on the property to determine if they will lend you the money for your second mortgage. If you have a good equity in your first loan then you should have an easy time finding a lender. Significant equity in your first loan will most certainly ensure someone will loan you for your second mortgage.
Another thing that you need to get a second mortgage is a good debt to income ratio. For example, if you make $2000 a month, and have $400 in mortgage expenses, $200 for insurance, and $150 in taxes then your debt to income ratio would be %37.5. Determining your debt to income ratio is fairly simple, and free. You compare all of your housing debts, including your mortgage expenses, taxes, and home insurance, compared to how much your monthly income is. So, take your monthly expenses and your monthly income, and divide them.
In addition, having a high credit score will help you secure a second mortgage. Credit scores are determined by a few factors. Your past credit uses, the number of times you as for credit, and your past delinquencies all are factors that determine our credit score. The higher your score is, the better it is for you. Credit scores ranges from 300-900, most people are in the 600-700 range. To secure a second mortgage you would want your credit score to be at least 500, but it should be 600-700.
Lastly, a solid employment history places a part in getting a second mortgage. For example, if you tend to move from job to job frequently, then you will be quickly over looked for getting a second mortgage. If you happen to hold on to jobs for years at a time, then you will have an easier time getting second mortgage. For example, if you held your first job for 5 years, and you are in your second job for your 6th year, then you should be set to get your second mortgage.
All in all, a second mortgage is an option many people look to use. Before you try to get a second mortgage in Colorado, check the above things, and make sure you will have a good chance of getting the loan.
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Date Published :
Mar 2 2009