I'd appreciate any thoughts on what would be the terms of a "good" 2nd mortgage and any suggestions on how to find the best 2nd.
I bought my first house (Southern California) in January 98. I
have excellent credit and have been swamped with 2nd mortgage
offers (and mortgage spam). I like the idea of paying off high
interest credit cards with money whose interest will be tax
deductible. I've cautiously responded to a few of the offers. I
responded to Providian and they have been extremely agressive in
their calls. The terms of their loan seem high - 15 year, 13%
interest, 4 points, variable rate capped at 19%(!)on a loan of
$40K.
I'd appreciate any thoughts on what would be the terms of a "good"
2nd mortgage and any suggestions on how to find the best 2nd.
If you want the interest on the loan to be tax deductible, then
you can't take out one of those "125%" loans or anything that
will exceed the equity in your house. Given that, all you need
to do is find a reputable local mortgage broker or as a last
resort a bank, and arrange for a home equity loan AKA 2nd mortgage.
You will get far better rates than what these damn sharks offer,
though exactly what rate will depend on many things, though with
a good credit rating, you ought to be able to get under 10% at
the very worst.
We bought a house in February 98, and have been similarly swamped
with these offers. Reading the fine print always reveals extremely
bad terms, but so many people care only about what their monthly
payment will be, not how long they'll be paying it off. I have
a hard time imagining myself ever running up $10Kor $15K on credit
cards (barring an emergency), and I suspect the people who are
getting these loans to pay off their credit card bills are busy
racking up more credit card debt.
Besides, if you have good credit, you're also probably being
inundated with "4.9% for one year on balance transfer" offers,
which kind of makes high interest credit cards *and* 2nd mortgages
unattractive. If you don't want to switch credit cards to get one,
call your credit card company and tell them you want them to match
the offer. We're planning to finance a bathroom remodel with
just such an offer, it really beats any home equity loan we
could get.