What Is a 2nd Mortgage or 3rd Mortgage?
By Trevor Hickey

You may have heard the terms – 1st (first) mortgage, 2nd (second) mortgage, or 3rd (third) mortgage. These terms simply refer to the order of the mortgages on title. “Title” simply refers to the document that references who owns the property and who has a financial interest in it. So – if you buy a house and you get a mortgage to do so – that mortgage will be in 1st position.

Now – another valid question is why doesn’t everyone offer 2nd or 3rd mortgages (since they pay the investors more)? Well – you want to be the first mortgage holder (or at least 2nd) (“holder” means that you have leant the money and that you are the lender). The reason why you want to be the 1st (first) mortgage holder is simply because then you have priority if the property ever goes into foreclosure (“foreclosure” means you haven’t made your payments and that the lender(s) are taking the house and trying to sell it to get their money out of it). The reason why you want to be in 1st (first) position is because, when a property goes into foreclosure, you get paid first when it sells (this is huge). The reason why this is huge is because when you try and sell a house (as a lender/mortgage holder) you will likely try and sell it as fast as possible so that you can get your money back asap. And since you are trying to sell this thing fast – you will likely sell it for less than it’s worth and if you don’t have enough money to pay back all the loans that have been borrowed against it then those in 2nd and 3rd position may end up not getting how much they are owed – ie. if your 1st mortgage that you owe is $50,000 – your 2nd mortgage is $25,000 and your 3rd mortgage is $15,000 – then you owe a total of $90,000. If your house is worth $150,000 then there is lots of room to pay all these bills; however, since you tried to sell it asap and you could only sell it for $100,000 – then there is only $10,000 extra – now we can’t forget the lawyer and Realtor (who are needed to sell the thing – so they get paid 1st, and then the 1st, 2nd, and 3rd mortgages are paid. Seeing as Realtor and lawyer fees can easily get to be more than $10,000 – then the third mortgage (and possibly the 2nd mortgage) won’t get all their money back.

So – now you can see the dangers of being a 2nd or 3rd mortgage lender/holder. You may then ask – why doesn’t the 2nd or 3rd mortgage company just foreclose and then sell the property for what it’s worth and then get their money out too? Well – if you are a 2nd or 3rd mortgage lender, you have to pay the mortgage payments on the mortgages which are ahead of you (otherwise they may go into foreclosure too – and if they sell it before you then you could have just paid a bunch of legal fees and not been paid back when the house sells). So – the moral of the story is simply this – sometimes it does pay to get a more expensive 2nd or 3rd mortgage than to re-do your 1st (or 2nd) mortgage. Also – there is a lot of risk associated with holding a 2nd or 3rd mortgage – so, the rates and fees that they charge are often justified.

A good way to view how many mortgages you have is to think “if I won the lottery – how many mortgages would I have to pay out to own this house completely (and not owe anyone anything on it)?” You may then ask why you’d ever want a 2nd (second) mortgage or a 3rd (third) mortgage?

Trevor Hickey, B.A. is a Calgary Mortgage Associate with Concord Mortgage Group Ltd. in Calgary, Ab http://www.mortgagebrokercalgary.info trevor@concordmortgage.ca (403) 860-8738

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Financing Home Improvements with a Second or Third Mortgage
By Carrie Reeder

Financing home improvements with a second or third mortgage allows you to maintain or increase the value of your home. With home equity loans secured by your property’s value, mortgage rates are relatively low. In addition, tax laws also allow you to deduct second mortgage interest in some cases.

But before you sign for your new loan, make sure you are getting the right type of financing for your project. Also, take time to research lenders for low rates and fees.

Start With A Home Improvement Budget First

Before you look for financing for your home repairs or remodel projects, draw up a realistic budget with estimated cost overruns. This is the time to collect project quotes from at least three contractors. Or if you are planning to do the work yourself, price out materials and fees for rental equipment.

For projects less than $2000, take a look at a home equity line of credit. This type of financing usually has no application fees and low adjustable rates for the first couple of years. Lines of credit also give you flexibility in using your principal, so you only pay interest on what you borrow, when you borrow it.

If your projects are larger, a closed second or third mortgage will provide you with better rates over the long term. With a longer period to repay your loan, you are also likely to recoup the cost of closing fees with a low fixed rate.

Take Advantage Of Online Quotes

Once you have selected the type of financing you want, shop around rates and fees to determine the best deal. With online lenders, you can quickly investigate rates from their websites. You can even request custom quotes based on your credit score and financial assets.

When you allow financial companies to access your credit report, you have a 30 day grace period where repeated inquires don’t hurt your score. After that, your score will be temporarily lower. So only ask for quotes if you are serious about applying for financing.

Securing financing for your home improvement projects usually takes less than two weeks with most lending companies. With today’s online lenders, paying for your home’s renovations will be the easiest part of your project.

ABC Loan Guide has a list of free Home Equity Lenders Online, or more information regarding a 2nd Mortgage Online.

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Third Mortgage Loans – A Few Things to Know about 3rd Mortgages
By C.L. Haehl

Third mortgages are loans that are subordinate to the existing first and second mortgage loans. Though, third mortgages were common in the seventies and eighties, the savings and loan scandals changed the course of home mortgage loans.

Nowadays, it is rare to find home equity lenders offering third mortgages. You can find properties that have two to three mortgages or land contracts at the same time. Lien position is required mainly because in case of a foreclosure, the legal entities identify the mortgage lenders to be paid first, depending upon the lien position on title. There are a number of home equity lines considered to be third mortgages.

Similar to fixed rate third mortgages, it is difficult to locate a broker or a bank that would provide you with a secured line of credit in the third position. However, it might be possible provided you have equity in your home and you wish to leave your existing first and second mortgages out of refinance. Only then you can get cash through the third mortgage credit line. Third mortgage loans have a number of benefits. They offer a number of options, debt consolidation loans, third mortgage refinance, third mortgage lines of credit and more.

You can enhance or at least maintain the value of your home by financing home improvements with a third mortgage. The mortgage rates are generally low when secured by home equity loans. Moreover, tax laws allow you to subtract the second mortgage interest in certain cases. You should also research properly the lenders, to find low rates and fees. Before searching for financing for your home repairs or remodeling projects, always draw up a realistic budget along with the estimated cost overruns. Once you finalize the type of financing you need, shop around for the rates and fees and identify the best possible deal.

Recommended Second Mortgage Companies Online – We maintain a list of recommended mortgage companies online and update the list regularly.

Bad Credit? See a List of Poor Credit Mortgage Companies Online

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http://www.mortgagebrokercalgary.info A great clip about what 2nd (second) or 3rd (third) Calgary mortgages are and how they can help you.

Can you wipe out your second or third mortgage in a chapter 7 bankruptcy case? Find out here!

You know, the one caused by unregulated financial institutions who did what unregulated industries always do in capitalism – create a crisis.

If we had not allowed banks to sell mortgages to third parties, we would never have had this depression.
They did not guarantee any bank’s loans, you silly person.
My point is, the more you regulate financial services, the less problems you’ll have.
that’s right, illegal immigrants with credit cards caused a global economic depression! Don’t forget about fluoride in the drinking water, you dingbat!

very Intelligent as it is well known that the government deregulated under Billy Cigar Smoking Clinton, and it has always been the democrat party’s position to reward incompetence

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One of the question I received a lot from coaching students is how can I advertise for private lenders in my real estate investing business. And more specifically, can I use radio or newspaper advertising to get people to come to a free seminar or to call me directly. However, there are real problems with this type of advertising.

A student recent told me he was about to post some newspaper adds and radio promos for a seminar to raise private money for my real estate investing business. He checked with my local SEC office and was told he could not do these types of promotion for private lenders. The SEC said that private mortgages are classified as “securities” and although they are exempt from a formal SEC filing they can not be presented as a “public offering”. They also told him they watch the newspapers and airwaves for such offerings and that he would definitely have heard from them if he had proceeded as planned. He then went to two local securities attorneys that confirmed this. One attorney suggested that he promote his seminars as strictly educational and maybe sell a product or book. But that he should not solicit directly at the seminar. After the seminar, he can develop a relationship with interested parties and work those leads as future potential lenders.

We teach students that marketing for private lenders is as much about what you “do” as well as what “NOT to do”. I strongly suggest that all marketing for private lenders be done on a low key person to person basis. We like doing local seminars for elderly groups or business associations where you provide some great information about the advantages of investing in real estate mortgages. At these meetings or seminars, you do NOT make an actual offer to invest but do encourage attendants to call if they would like to find out more or possible arrange a one-on-one meeting. It is at this second or possible the third or fourth, meeting you can see if the person would actually like to become private lender into your real estate investing business.

We do NOT recommend any type of big or public advertising such as internet sites, public classified sites like Craig List, newspapers or radio ads. All of these have numerous problems including the potential attention of your local or federal SEC departments. I can tell you from personal experience, you do not want these type calls.

Michel Lautensack
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At an open house event in Winnetka I met Diane Falk, a mortgage loan originator at Fifth Third Bank.

I’d been hearing stories of people paying cash for homes because they thought they couldn’t get a mortgage, so I asked Diane to talk about that topic and other trends she’s seeing on the North Shore.

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http://www.CaliforniaMortgageandRefi.com California Mortgage & Refinance with LMC Financial. Mortgage rates are at 60 year lows and home prices have dropped at least 40%. Visit my blog for daily updates in the mortgage industry.

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We have no private agreement (never done) but are all on the title as well as on the mortgage.

If that partner is on the title and on the mortgage, it doesn’t matter if there’s an agreement. He/she cannot just walk out. If that happens, you can legally bring her to justice (court). It also depends on how long the lease is, though, but he/she cannot leave.

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