Debt Consolidation Second Trust Mortgages
Debt consolidation second trust mortgages offer a convenient way to take equity out of a property to consolidate other consumer debt. A second trust mortgage carries a fixed interest rate for the life of the loan and amortization periods range from 5 to 20 years with a new product amortized over 30 years with a balloon due in 15 years. The longer amortization priod lowers your monthly payment significantly. In a debt consolidation transaction, a second trust can be used in combination with a first trust to avoid paying Private Mortgage Insurance or PMI. Frequently described as an 80/10/10 or 80/15/5 or 80/20 the first trust is set at 80% of your home value eliminating PMI.
This combination approach allows you to tap all of the equity in your home without the need for PMI.
Second Trust Mortgage 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 enough debt at closing. Debt paid at closing is not counted in the ratio calculation.
Second trust mortgages can be arranged for up to 125% of the value (including your first trust) of the property. Interest rates generally increase any time your combined loan to value (CLTV) exceeds 80%. 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. This approach is referred to as a debt consolidation second trust mortgage loan.
We have a page on how to calculate your debt consolidation second trust qualification ratios.
We have a page on debt consolidation second trust documentation requirements.
We offer you the ability to qualify and close into several unique programs which accommodate borrowers with non traditional income or asset situations. Please visit my No Docs page for additional information on a No Documentation Second Trust.
I also offer a debt consolidation calculator which should be useful.
Read more about Debt Consolidation Second Trust Closing Costs
* I have included a section on the new Cash Flow ARMS. A LIBOR based product which gives you complete flexibility in managing your mortgage.
Learn more about the tax considerations of home equity loans
The new Asset Manager is a creative HELOC which gives you complete control over your mortgage as well.
Learn more about improving your credit scores
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.
Prequalify for your Debt Consolidation Second Trust