If you need money and have paid off a decent chunk of your mortgage, a home equity loan can be a tempting option.
These loans generally carry lower interest rates than other consumer loans, because they are secured by real estate.
Using your home as collateral isn’t an issue if the borrowing terms are reasonable and your finances are in order. Nevertheless, it can quickly turn into a nightmare under the wrong circumstances. Fail to keep up with repayments and you risk losing your property and maybe even getting sued.
What Are Home Equity Loans?
A home equity loan basically enables you to use your home equity as collateral to borrow a lump sum of cash. So, for example, if your property is valued at $500,000 and you owe $200,000 on your first mortgage, you have $300,000 in equity that can be used as a guarantee for a second loan.
Lenders will offer more-competitive borrowing rates if you use your house as collateral, because it gives them something valuable to seize and sell to recoup some or all of their losses in the event that you are unable to keep up with payments. This means cheaper loans but also the risk of losing your house if you default.
What Happens if I Don’t Pay My Second Mortgage?
If you are for whatever reason unable to repay a home equity loan, the lender may choose to foreclose on the house you used as collateral. The creditor’s actions usually depend on the value of your home, whether there are any other liens against it, and how much money you still owe.
When a borrower defaults on their first mortgage, the loan used to buy the home, lenders are highly like to begin foreclosure proceedings to get their money back. Whether this same approach is adopted on a second mortgage depends on the property’s value and how much equity the borrower has in it.
This is because the first mortgage lien, by virtue of being recorded in the county land records earlier, is given higher priority. Thus, if you fail to repay your home equity loan and the secured house is sold to satisfy the debt, the proceeds will first be used to extinguish whatever is left to pay on the initial mortgage. The second mortgage lender can only begin to collect what it’s owed once the more senior lien has been honored and paid off.
7¢ Skip Tracing – Guaranteed lowest price on the market for the best quality data.
Don’t just take our word for it. Try us out by running a small list first to see the tier 1 data for yourself. We are offering non-members access to member pricing, so you can experience the Skip Force Difference and improve the quality of your lists.
Pay wholesale price for quality data
Receive the TOP 3 Phone Numbers
Discover which phone numbers are best
Learn the BEST Time to reach a contact
We can take your old list, grade it and come up with the
BEST NUMBERS to contact
Develop a SNIPER MARKETING Plan
Increase ROI and TEAM MORALE
We have extended this special but cannot afford to keep this offer running for long.
Have Questions? Reach out to us, we’re here to help.
Call us at: 866-962-8190
Get Started Now
Related News
SF Pricing Explained SF Pricing Explained – We have multiple options with our skip tracing and property data services. I’m going to break it down for you so you can make the best decision for your business. For skip tracing, there’s member pricing and nonmember pricing. Now you’re going to get the same data for […]
Improve Lead Flow With These Cold Calling Tips Many investors have given up on cold calling. Do you know why? Because they can’t execute. Is that you? Well, in our investment business, cold calling generates 30 to 45 leads with just three full-time internal sales agents from ISA Pros. If you want to instantly […]
Leveraging these key strategies can enable investors to optimize and accelerate their success. Success in Business – When it comes to running a successful business, there are certain hallmarks that appear in nearly every entrepreneurial operation. It’s no different for real estate investing and financial ventures. Leveraging these key strategies can enable investors to optimize […]