i'm soon going to be out on my own, so i'm trying to figure out what finances and stuff is all about. what is a mortage? and second mortage etc?
2007-02-12 04:32:10 · 8 answers · asked by guitarbuttmunch88 1 in Business & Finance ➔ Personal Finance
When you buy a house, it might cost $200,000. Most people don't have that kind of money laying around so they borrow the money from the bank. That is the mortgage. Then they have to pay that back a little every month, with interest of course.
A second mortgage is if you already own a house, that is worth, say $200,000, but you only owe $120,000 on the house...you can borrow up to another $80,000. That would be your second mortgage. Now, you have two loans to pay.
If you are just getting on your own, you'll probably rent for awhile before buying...so you won't have a mortgage, only rent.
2007-02-12 04:38:05 · answer #1 · answered by Captain Jack 6 · 1⤊ 0⤋
A Mortgage is a loan you take out to purchase a home. You can either go to your local bank, go to a mortgage broker or use the internet.
The rate you get depends on your credit scores and open credit. For example, if you have any lates on your record, judgements or tax liens, your credit score will be pulled down. Also, if you have no credit, this also affects your score.
If you are renting now, it is very advisable to pay with a check so you can prove your rental history.
Sometimes you may get a loan that is an 80/20 which the 20 is considered a second. You will then have two payments.
Try to get a seller concession of 3-6% of the selling price. This means that the seller is giving you money towards the closing so you may have to come in with little or no money to close. When someone tells you that you can get 100% financing, this does not mean that you can roll the closing costs in the loan also. It is just 100% of the sales price.
Be careful of Mortgage Brokers that may charge you really high fees. There are a lot of honest ones, but also a lot of rip offs. Be careful of really low broker fees also because they are probably charging you Yield Spread Premium - which means they jacked up your rate to make money and you will end up paying more in the long run.
There are a lot of other things involved that people don't know about but here is just a few hints.
2007-02-12 12:49:42 · answer #2 · answered by kelbean 4 · 0⤊ 0⤋
A mortgage is a loan from a bank. It says they will give you thousands of dollars to buy a house and you will pay that back as hundreds of dollars each month, including the interest you owe for the loan. After 30 years you will own the house and the bank will sign off that the loan is done. If you don't pay them they will take the house and sell it themselves to get the rest of their money back.
That is a simplified version of first mortgage. Keep in mind it is a legal contract and the bank is serious about wanting their money, that over the life of your mortgage loan you probably end up paying twice the price of the house to the bank (as their interest), that mortgage interest is deductible on your taxes, and that this info shows up on your credit report.
A secondary mortgage is what you get after you have paid off some of the cost of the house (or it has gone up in value to be worth more than you owe). It is another loan that you need to pay at the same time as the first one and if you don't it is another way to lose your house. Second mortgage interest rates tend to be higher than first mortgage ones since the lender is taking more risk by being second on the line to take the money out of your hide if you fail to pay.
2007-02-12 12:44:39 · answer #3 · answered by Rich Z 7 · 0⤊ 0⤋
The money you loaned from a bank, when you bought your house. You then pay it back in monthly installments with interested added on. Your house ends up costing alot more than the purchase price. Hence the word ' MORT' meaning death. Second mortgage. If you want to lend more for an extension, instead of taking out a normal loan you can add it to your mortgage
2007-02-12 12:40:37 · answer #4 · answered by ghowson338@btinternet.com 1 · 0⤊ 0⤋
A mortgage is the plan to pay back what you borrow from a lender who lends you money to buy a home on your promise to pay the money back, usually with interest to cover inflation and operating expenses for the lender. A second mortgage is when you pay off the first one and refinance at a lower rate or you take out another mortgage on the original home,as I understand it, paying off the first one.
2007-02-12 12:52:12 · answer #5 · answered by Anonymous · 0⤊ 0⤋
In simplest terms, a mortgage is a loan secured by a lien on your property. i.e. if you don't pay the loan they take your property
2007-02-12 13:09:23 · answer #6 · answered by Quixotic 3 · 0⤊ 0⤋
best answer i can give you is here ...
http://en.wikipedia.org/wiki/Mortgage
2007-02-12 12:40:25 · answer #7 · answered by join_my_world_of_ignore 2 · 0⤊ 1⤋
.................
2007-02-12 12:50:12 · answer #8 · answered by athena x15 2 · 0⤊ 1⤋