A borrower might need to access additional equity when they already have a 1st mortgage. A mortgage that goes subsequent / falls behind the 1st mortgage is called a 2nd mortgage. Marquee Funding Group offers 2nd mortgage hard money / private money loans for owner occupied and non-owner occupied properties. Property types include: single family residence, multi-family, commercial, industrial, and land. Furthermore, Marquee offers 2nd mortgages for either consumer or business purpose.
A consumer purpose 2nd mortgage is used to pay off high interest debt: credit cards, personal loans, medical bills, tax liens, judgements, and foreclosure bailout. Conversely, a business purpose 2nd mortgage can be utilized for purchasing / improving an investment property. It can also be used for business growth purposes: operating capital, purchasing new equipment, purchasing a new office, etc. A hard money second mortgage can be more beneficial than a HELOC (home equity line of credit) for various reasons:
1. Hard/private money loans do not appear on credit report
If your goal is to improve your credit score by paying off debt such as credit cards, it will be difficult to do so with a HELOC. For example, if you have $100,000 in credit cards and obtain a $100,000 HELOC, your overall outstanding debt remains the same and will unlikely see a boost in credit score. Using the same example with a 2nd hard money mortgage, your overall outstanding debt appearing on your credit report will be lowered $100,000, likely resulting in an increased score.
2. Poor credit is okay
HELOC’s typically require a credit score of at least 700, while Marquee may accept credit scores as low as 500.
3. Higher debt-to-income (DTI) ratio allowed
HELOC’s follow the same DTI ratio requirements as conventional mortgages, with a back-end DTI ratio up to 45-50%. Marquee offers 2nd mortgage hard money loans up to 60% back-end DTI. This requirement can make all the difference to a borrower with high debt ratios.
4. Quicker closing
HELOC’s usually take 30-45 days to close, while a 2nd hard money mortgage usually takes 10 days for consumer purpose and 7 days for business purpose. If you urgently need the funds, a 2nd mortgage might be better.