Junior Mortgages
Junior mortgages are used for many different purposes, from consolidation of debt to home improvements. There is some confusion as to what a junior mortgage loan is. This loan type, a home equity loan, or a home equity line of credit (HELOC), are the same thing but structured differently. Any loan secured by your home that is not the primary mortgage loan is a junior mortgage loan. The primary difference between this type of loan and a HELOC is that most lenders reference this product as a one-time advance, repayable over a specific time, whereas a HELOC is a line of credit that may be paid down and re-advanced without additional paperwork or bank intervention. For HELOC information, go to Mortgage Loans-HELOC.
For our purposes here, we will be discussing a one-time advance repayable over a specific time period with specific repayment terms.
General terms
- Flexible terms available
- Tax statement or market analysis used for real estate evaluation (in some cases an appraisal may be required)
- Repayment is usually calculated on a specific term and is normally structured as a balloon loan*
- Loan is secured by your home
- 80% loan-to-value as determined by either a real estate evaluation or appraisal
- Automatic payment available
- All loans subject to credit approval
Costs
Some costs are variable depending on the property location, as costs vary from state to state. In addition lender fees vary greatly, an individual is wise to shop and compare. Other factors that may affect the closing costs are:
- Lien search
- Amount of loan
- Recording fees
- Lender you are using
Additional Information
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