Second Mortgages and Home Equity Lines of Credit

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Mortgage Master Service Corporation has second mortgages (home equity lines of credit aka HELOC) available for homes located anywhere in Washington state. The second mortgage/HELOC is limited to owner occupied/primary residences and second homes. They are not currently available for investment property.

HELOC’s allow you to have access to your home equity without refinancing your first mortgage. The rates are based on the prime rate and will vary whenever prime rate is adjusted. The “prime rate” follows the Fed Funds, so whenever you hear that the Fed has moved the Fed Funds rate, home equity lines of credit have adjusted higher or lower (or stayed the same when there is no change to rate). In our current economy, I would plan on prime increasing since the Fed has held the Funds rate at extremely low levels for so long. So if the idea of your rate adjusting higher makes you squeamish, this product may not be the right for you.

With our current increased home values, if you’ve been considering remodeling your home, consolidating debt or wish to extract equity for any reason, you may want to consider a home equity line of credit.

Home equity loans may also serve as a strategic tool when you’re buying a home if you’re trying to avoid private mortgage insurance or want to keep your first mortgage loan amount at a conforming loan amount. When a second mortgage follows a first mortgage, it’s often referred to a “piggy-back” second mortgage. In order for Mortgage Master Service Corporation to provide a second mortgage/HELOC on a purchase scenario, we must be originating the first mortgage as well.

The HELOC has an interest only period for the first 10 years and then converts to a 20 year amortization after the first 10 years. This is a payment jump so a good plan is to have enough funds to pay off the HELOC in 10 years (or refinance or sell in 10 years).

If your home is located anywhere in Washington state, where I’m licensed, I’m happy to help you and review your mortgage options.

 

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