Second Mortgage: Removal of a 2nd Mortgage Through Chapter 13 Bankruptcy
You may wish to make some important home improvements. Perhaps you need to find a way to lower your monthly mortgage payment. There are many reasons to consider a refinance. When you shop for loans, you may have more options than you realize. Second Mortgage- You can get money for things like home improvements with loans called second mortgages. However, this is not the option to choose, when you need to lower your monthly mortgage payment. A second mortgage will give you another monthly house payment, in addition to your current mortgage. However, it can be a good way to get extra money that you can use for any purpose that you like.
A mortgage which is registered after the first one is referred to as a second mortgage. Second mortgage is often referred to as a Subordinate loan. This is because the first mortgage takes priority over the second mortgage in case the borrower defaults. First mortgage will be paid first and only after that, the second one will be paid. This is the reason second mortgages always comes with a higher interest rates.
People take out second mortgage for variety of reasons including debt repayment, medical bills payment, financing the education costs, home renovation, buying another home and creating a home equity line of credit. Second mortgage is also referred to as Home Equity Loan.
Once the motion is approved, you will need to make all plan payments (over a 3 to 5 year period) and obtain your discharge. Once the debts are discharged, the second mortgage is completely gone. Under existing Bankruptcy laws, debtors are not able to force a first mortgage to modify the terms of the mortgage on loans for their primary residence. Many lenders who realize the alarming state of the economy are willing to negotiate a modification of their mortgage, allowing a debtor to lower their monthly payments. This is a relatively recent change for many lenders who had previously refused to accommodate such requests. Such a modification may drastically help a homeowner who wants to keep their home but who is suffering from a reduction in income and home value. This benefit is even more evident when used in conjunction with the removal of a second mortgage for debtors who have both a first and second mortgage.
You also need to exercise caution with some kinds of refinancing. It is very important to know all of the closing costs. If you have to pay a great deal in closing, it can raise your principle, and this can affect your payment. Also remember, when you see a monthly payment amount advertised, they are not telling you the whole story. These amounts do not include insurance and taxes. Taxes and homeowner insurance can add a great deal to your payment.
Learn more about Obama Mortgage Relief Plan Qualifications.
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