You’re already paying down your initial mortgage. Why get a second mortgage? With traditional second mortgages from a bank or mortgage lender, it’s true that it may not be worth the cost and may not even be an option for you.
However, a second mortgage from a private money lender could be used to pay off high-interest debt or help your business grow, all while improving your credit score instead of hurting it. With traditional second mortgages, debt remains the same on your credit report.
Read on to explore what a second mortgage is, the differences between traditional and private lenders, and how you can use a second mortgage from a private money lender for your benefit.
What is a second mortgage?
A second mortgage from a traditional institution and from a private lender work differently and have varying requirements and benefits. In general, this type of loan is made in addition to your first mortgage and can be useful for financing anything from education to business equipment.
Let’s dig into the differences between traditional and private lenders.
Banks, credit unions, and mortgage companies issue common financing such as conventional and FHA loans. You most likely got your first mortgage through a bank or mortgage company, so you remember the long list of requirements and the months it took for approval.
Now, you’re at a different point. You’re making your monthly mortgage payments, but you see areas of debt you want to work on. Or, maybe you want to grow your business, or use the money to purchase or improve an investment property. That’s where a second mortgage comes in.
Second mortgages from banks can include standard home equity loans and Home Equity Lines of Credit (HELOC). Homeowners can borrow against their home equity to finance other expenses or consolidate debt. So, what’s the downside?
Since second mortgages are higher risk, not all lenders will even offer this option, and if they do, they need to ensure you have the following:
- Significant equity paid through your first mortgage
- High credit score
- Low Debt-to-Income ratio
- Steady employment history
Many people may not be able to easily meet these requirements. This is especially true if, over time, your credit score has taken a dive, your employment has been inconsistent, and your debts have piled up.
Even if you could easily qualify, consider the benefits of a second mortgage from a private money lender. These types of loans could offer you even more benefit than your bank can, especially as far as your timeline and your credit score are concerned.
Private money lenders
Marquee Funding Group offers second mortgage hard money loans for consumer or business purposes. A lower credit score and higher Debt-to-Income ratio are allowed, because private money lenders focus more on the deal and your unique situation.
If it makes sense, we will do it, and we have years of experience and industry knowledge to back our decisions.
Second mortgage private money loans can be more beneficial than a HELOC because they don’t appear on your credit report. If you’re trying to pay off credit card debt with a HELOC, for example, your debt will remain the same, whereas with a hard money loan it will be decreased.
How can I use a second mortgage?
Second mortgages commonly are used for home improvements, consolidating debt, or financing education.
Here are some debts you can pay off using consumer-purpose second mortgages:
- Credit cards
- Personal loans
- Medical bills
- Tax liens
- Foreclosure bailout
For other situations, business-purpose second mortgages can be used for the following:
- Purchasing or improving an investment property
- Operating capital
- Purchasing a new office or equipment
- Start-up costs for new businesses
- Buying out partners
How to get a private money second mortgage
Marquee Funding Group wants to simplify the deals that present challenges with traditional institutional lenders. If you tried to get a second mortgage from a bank or mortgage company and were unable to qualify, or if the timeline is too long for your needs, we can help.
One of the biggest benefits to getting a hard money loan is the speed. We can close on the deal in as little as seven days, and provide same-day approvals. We look at your situation and make quick, common-sense decisions based on the information you provide.
Our goal is to give you a respectful experience that focuses on your best interests. Building relationships with you means more confidence and a smoother experience on both ends. We want to do long-term business with you.
- Owner-occupied or non-owner-occupied consumer or business purpose loans
- Common-sense underwriting
- Loan amounts from $50,000 to $20 million
- Single-family, multi-family, commercial, industrial, construction, and land loans
- Purchase money, rate-and-term refinance, and cash-out refinance options