- With today's low rates, it's possible to get a second mortgage with lower interest than the first.
Can You Have a Second Mortgage Lower Than the First?
Most consumers already know applying for a second mortgage is different today than it was 10 years ago. Today, lenders have higher standards and want to know more about each borrower.
Typically, a second mortgage is more expensive to consumers than a first mortgage. However, because interest rates are so low right now, finding a second mortgage with lower interest is possible. Many second mortgages come with an adjustable interest rate, but can save the homeowner money if the current mortgage is a a high-interest first loan and the borrower is not eligible to refinance it.
If you want to make home improvements or pay off debt, accessing the equity in your home may be your best possible option, but you need to be careful. If you are thinking of applying for a second mortgage of any type, you should first evaluate your full financial picture. Make sure to consider any costs of refinancing, comparison shop for the best loan product, and be certain to take the time you need to make the right decision.
Additionally, qualifying for a second mortgage is more difficult now due to the fact that home values have dropped by so much in the last three years. Lenders are increasingly more reluctant to be in second position because of the risk factor and because they have been burned by foreclosures. Lenders who found themselves holding seconds on foreclosed properties basically lost everything since foreclosure proceedings paid off the first lien holder first. If anything was left over, which most of the time there was not, it would go to the second lien holder.
In order to qualify for a second mortgage (Home Equity Line of Credit or Fixed Rate Second) you need to have great credit and a lot of equity.
Mortgage market: a pulse check
No surprise that mortgage rates fluctuate. If you are thinking about purchasing a home or maybe considering refinancing your current mortgage, then you want to be up to date on mortgage rates.
Mortgage rates April 10, 2024
According to Freddie Mac, the 30-year mortgage rate for the week of April 10, 2024 stands at 6.88%. This 6 basis points increase from the previous week's rate.
Additionally, Freddie Mac reports that the 15-year mortgage rate for April 10, 2024 is 6.16%, indicating a 10 basis points increase from previous week’s rates.
Note: A basis point is equal to one-hundredth of one percent (0.01%). In numerical terms, if the mortgage rate changes by 20 basis points, it means the rate has changed by 0.20%.
What does the mortgage rate mean for you?
Mortgage rates play a vital role in determining your monthly payment. Let's take a look at the avergage interest rates (APR) for April 14, 2024 based on Zillow data for borrowers with a high credit score (680-740) in the United States:
- For a 30-year conventional loan, the interest rate is 7.09%.
- If you opt for a 15-year conventional loan, the interest rate stands at 6.29%.
Using the rates mentioned above, a $279,082 30-year-year mortgage would result in a monthly payment of $1,874. On the other hand, a 15-year mortgage would require a monthly payment of approximately $2,399.
Explore your options and secure pre-approval today!
To make your life easier, we highly recommend shopping around for mortgages and getting pre-approved. This will streamline the home-buying or refinancing process and make it a breeze. Ready to get started? Check Out mortgage rates now for the best options available.
