Second Mortgage Interest Rates
by Melodie from Federal Way, WA King County
Regarding second mortgage interest rates and fees: Kate, why are there so many fees on a 2nd mortgage loan? I don't understand why the interest rates are so much higher also. Can you help me?
Kate Answers: Second Mortgage Interest Rates
Dear Melodie, A second mortgage compared to a first mortgage is riskier for mortgage companies. That is because in the event of a foreclosure, the holder of the second mortgage has less chance of getting paid off than does a first mortgage investor.
This risk is passed on to the homeowner in the way of higher interest rates, more fees and even prepayment penalties.
However fees vary among lenders. Some of the big banks from time to time run specials on home equity loans. This of course depends on the state of our economy, appreciation or depreciation in the real estate market and the condition of the credit markets.
Closing costs also depend on the homeowner's credit file. The lower the credit score, the greater the fees. So if you are concerned with the second mortgage interest rates and fees you are being charged, talk with your loan representative.
And remember, you can ask your Realtor to review your good faith estimate or recommend another lender.
The following pages shed more light on mortgage fees. After reading through them, I hope you'll let me know if you have more questions. Best Mortgage Advice on Buying Points
- Are they just a gimmick for the bank to get more money out of your pocket?Understanding Mortgage Closing Costs
- I'm going to simplify Good Faith Estimates right now and reveal little known secrets to becoming a savvy mortgage shopper.Compare Mortgages
- Are you looking for a unique method to compare mortgages?
Don't miss checking this new Ask Kate answer:How to Reduce Mortgage Refinancing Closing Costs
- Let's learn to lasso mortgage closing costs once and for all!
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