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California Second Mortgages                                                                                                         

California second mortgages offer a convenient way to take equity out of a California property or provide financing in a purchase, refinance, or debt consolidation.   For difficult to verify income, stated income California second mortgages are available. Interest only California second mortgages will lower your payment. Second mortgages carry a fixed interest rate and amortization periods range from 5 to 20 years with a new second mortgage product amortized over 30 years with a balloon due in 15 years. The longer amortization period lowers your monthly payment significantly. In a purchase transaction, California second mortgages are used in combination with a first mortgage to avoid paying PMI. Frequently described as an 80/10/10 or 80/15/5 the first mortgage is set at 80% of your purchase price/value. Add a second mortgage of 10 or 15% of the purchase price and you supply 5 or 10% cash. Advantages of this second mortgage approach include:

  • Your entire mortgage payment is tax deductible

  • You may pay off your second mortgage early reducing your total payment.

However, there are some potential problems with the strategy.

  • Your second mortgage may include a prepayment penalty - our programs do not

  • Depending on the rate on your second mortgage your total payment may actually be more. Send me an email with your anticipated sales price and I will be happy to run Good Faith Estimates comparing both approaches for you.

California Second Mortgages Debt Ratios

Debt ratios are determined by dividing your total monthly debt by your monthly pretax income. Our programs will allow up to a 45% total debt ratio. If you are refinancing, one effective strategy to get your ratio down is to pay off debt at closing. Debt paid at closing is not counted in the ratio calculation.

Second mortgage products can be arranged for up to 125% of the value (including your first mortgage) of the property. Interest rates generally increase any time your combined loan to value (CLTV) exceeds 90%. However, high CLTV rates are generally lower than other consumer or credit card rates and the longer amortization schedule can significantly reduce your monthly payment. I have had clients cut their monthly payments in half using their home equity instead of paying high credit card payments. These are referred to as a debt consolidation California second mortgages

Learn more about second mortgages closing costs

Please feel free to email with any questions about California second mortgages.

We have a page on how to calculate your second mortgages qualification ratios.

We have a page on second mortgages documentation requirements.

Learn about the differences between home equity loans and lines

We offer you the ability to qualify and close into several unique programs which accommodate borrowers with non traditional income or asset situations. 

* I have included a section on the new Cash Flow ARMS. A LIBOR based product which gives you complete flexibility in managing your financing.

As a Certified Mortgage Planning Specialist, I offer an analysis of your situation today can make suggestions on how small changes in how your consumer and mortgage debt is structured today can have a life changing effect in the years to come.  Read more about this free, no obligation service.

California Second MortgagesPrequalify for your California Second Mortgages  


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