Second mortgage loans often come with higher interest rates than first mortgages. For this reason, it is advisable to get rid of your second mortgage loan as quickly as possible. This practice will help you to freely walk away from your debts faster.
There are many options available to handle your second mortgage loan. Depending on your mortgage case, lender and personal income, some things may not work out for you.
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Here we have compiled some practical solutions that are full of common sense and are likely to suit the needs of most debtors.
Table of Contents
Pay Down More Than the Minimum Amount:
Insert a “pay as you go” policy instead of keeping your principal amount unpaid for some more months to come.
If you are required to pay $900 for the principal amount, take charge of the situation and pay more so that you may convince your bank to apply this extra amount to your outstanding principal balance.
As you go down paying your principal amount faster the interest rate will continue to decrease over the life of your loan. Eventually, this can lighten up your financial burden tremendously.
Make Biweekly Mortgage Payments:
This is perhaps the most sensible advice that we will be giving you in this article!
Generally, you will be paying just once in a month to clear up your mortgage loans.
However, you can make your life easier by paying your mortgage loan twice in one month. This will eventually help you pay off your loan faster while forcing the interest rates to go down.
Refinancing Your Mortgage Loans
You must work quite diligently to get both your mortgages paid completely. To get your loans paid faster and easier, play the situation with a level-headed approach.
You can choose to combine your first and second mortgages and then convert it into one big loan.
This will prompt your lender to offer you much better and more suitable interest rate. This makes sense, as they would hardly want to lose a customer who is making a big purchase. In this way, you will be paying for only one loan every month curtailing both your financial and mental stress.
You will need to keep in mind that getting your loans refinanced will depend on conditions like the amount of your second mortgage compared to the first, amount of equity you have in the home, and your credit scores. However, refinancing conditions will highly vary from one lender to another.
Go for Lien Stripping
If your eligibility matches with certain jurisdictions of the law, you can opt-in for this legal procedure to free your home from the second mortgage.
Lien stripping allows bankrupt debtors to eliminate the second mortgage completely if their first mortgage amount is greater than the total value of the home. In this case, the second mortgage will be considered as an unsecured debt and will be stripped off if you have already completed your bankruptcy and had obtained a discharge.
Whether you will qualify for lien stripping or not will depend solely on your state jurisdiction, your loan amount and your financial state.