Thinking of a Second Mortgage? Read This!

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Thinking of a Second Mortgage? Read This!
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Synopsis

• What is a Second Mortgage?
• Acquiring a Second Mortgage in Toronto
• How To Go About Getting A Second Mortgage In
  Toronto For Yourself?
• What is a Mortgage Broker?
• Tips for Finding a Mortgage Broker
• The Truth About Mortgage Brokers
• Mortgage Bankers and Financial Institutions

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What is a Second Mortgage?

• Pros
• Quick access to cash- When you need money
  immediately, many of the vehicles available for a
  second mortgage allow you to access the cash
  available from your home right away.
• Low-interest rates- Sometimes, when compared to
  interest rates from credit cards, secondary
  financing options such as home equity loans offer
  very low rates.
• Use your homes value to improve your homes
  value- When done properly making renovations to
  your home by taking out a second mortgage can
  make up for added interest. It increases the
  overall value, makes it a more comfortable living
  space, and if you sell it will sell for more.

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What is a Second Mortgage?

• Cons
• Puts your home at risk- The greatest risk of
  getting a second mortgage in Toronto is that your
  home is your collateral. If you start missing
  payments because your finances change, you risk
  foreclosure. Your home secures your loan meaning
  the bank can seize your home if the second loan
  goes into default. The bank may then sell your
  house to recoup losses.
• Fees- Whenever you start a loan, you will pay
  fees. With a second mortgage, there are
  additional fees. You can expect to pay appraisal
  fees, loan application fees, and closing fees.
  All of those fees can really add up.
• More debt- The equity in your should be spent
  wisely, but even the best decisions cannot cancel
  out the fact that a second mortgage means more
  debt. You have to pay interest on that debt,
  leading to even more debt. Be extra cautious.

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Acquiring a Second Mortgage in Toronto

• All a homeowner must own is 20 equity in their
  home in order to qualify for a second mortgage
  loan on their home. When taking a second
  mortgage out on your home you can use the money
  to renovate your home, or you can use it as
  capital for a business venture you may be trying
  to acquire.
• When trying to qualify for a second loan in
  Canada it can be very difficult. Due to severe
  bank requirements and regulations, it can be
  quite hard to acquire a second mortgage loan
  through a bank lender. For this reason, many
  people go to private lenders to acquire a second
  mortgage. For this reason, if you have been
  denied by a formal banking institution for the
  second mortgage on your home, you might consider
  applying for a second mortgage with a private
  lender.

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How To Go About Getting A Second Mortgage In
Toronto For Yourself?

• The answer is clear. You take out a second
  mortgage in pretty much, the same manner, as you
  do a first mortgage. Nonetheless, you cant just
  go out and get a second mortgage, as you must be
  able to meet some guidelines to be approved for a
  second mortgage loan. You must have excellent
  credit and have more than 20 of the equity in
  your home. If you do qualify for a second
  mortgage in Toronto, you can get a second
  mortgage in the form of something affordable,
  which is no other than a home equity line of
  credit. If you have weaker credit and little
  equity in your property, the second mortgage will
  probably go through a trust company or private
  lender, which will be required for the loan to
  take place.

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What is a Mortgage Broker?

• When an individual becomes interested in
  purchasing a piece of property and they will meet
  with a mortgage broker who begins the tasks of
  collecting financial data that is important to
  the loan process. Financial documents such as
  taxes, bank statements, pay stubs, as well as
  obtaining a credit report.
• In the event the customer wants to refinance
  their current mortgage or property, the mortgage
  broker will need to make a determination of what
  the current equity value the home or property
  holds. Once this value is determined, the broker
  then calculates a payment and loan period using a
  mortgage payment calculator to determine the
  loan period and any other specifics of the loan
  that will be beneficial to the customer.
• Once the mortgage broker gathers all important
  financial documents and anything else that is
  crucial to the deal at hand, they then will need
  to establish the appropriate loan amount
  according to the value of the property, and once
  that is done, the type of loan that will be
  funded is then determined according to the best
  interests of the customer.

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Tips for Finding a Mortgage Broker

• The most obvious choice when looking for a
  mortgage lender is the persons bank it is sort
  of a one stop shop providing trust that already
  exists in the relationship. A mortgage broker is
  the next best option for the borrower that has
  problems obtaining a traditional bank mortgage.
• A mortgage broker has so much more access to the
  different types of loans that a bank simply does
  not have loans such as FHA, VA, Jumbo loans,
  USDA loans, also loans for those who have poor
  credit history where a bank would only have
  access to the conservative mortgages such as
  Freddie Mac or Fanny Mae.
• A mortgage broker can give you much more of a
  personalized loan assistance. A mortgage broker
  can create solutions to your credit issues no
  matter if it is a lower down payment you require,
  working with your limited credit file, or lowing
  any closing costs or mortgage insurance.

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The Truth About Mortgage Brokers

• How Mortgage Brokers Help Home Buyers
• A good broker helps you find your best mortgage
  option by
• Discussing your financial situation and goals you
  may have
• Finding available financing options and
  explaining them adequately
• Helping get preapproval for a mortgage
• Helping to complete the loan application and
  collecting the mountains of paperwork the loan
  officer needs
• Once approved, acts as a liaison between the
  borrower and the lender up all the way through
  the closing day.

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The Truth About Mortgage Brokers

• How Mortgage Brokers Get Paid
• Mortgage brokers actually make a majority of
  their income by marking up the cost of the loan.
  This gets passed on in the form of points, a
  higher interest rate, and processing fees. A
  savvy borrower can negotiate a brokers fee when
  it seems excessively high while a good mortgage
  broker should be able to find an affordable
  mortgage so you pay nothing above cost.
• Finding a Good Mortgage Broker
• Get recommendations from your friends,
  co-workers, real estate agent, and even other
  homeowners in the area. Look for someone who is
  patient and experienced working with buyers like
  you. Check out online reviews, such as Yelp or
  Zillow and the mortgage brokers website.
• Interview two or three potential mortgage
  brokers. They work for you after all. Ask about
  experience and certifications. Find out how many
  residential mortgages they have brokered in the
  past, explain any issues specific to your
  situation. If you are looking to purchase a house
  with a VA home loan, for example. Get the
  information of three references, and follow up.
  See whether these folks were actually satisfied
  with their loan and broker.

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Mortgage Bankers and Financial Institutions

• The banking industry is often a for-profit
  industry however, some banks are owned by the
  government and are considered not-for-profit
  entities. Central banks have quasi- dictatorial
  responsibilities and are also owned by the
  government. These banks are in charge of the
  interest rates and are considered a bank of last
  resort in the case of any banking crisis.
• When a mortgage broker is looking at the
  qualifications of an applicant, they view the
  applicants credit file, as well as their income
  this information is then matched to any lenders
  that may be interested in lending to the
  applicant. The mortgage broker will then act as
  an advocate aiding the applicant in seeking the
  home loan in which meets their income and credit
  qualifications.
• The mortgage broker is not a direct employee of
  the lending agency whom the applicant is referred
  to however, the broker may work for a large
  company that is affiliated with the lending
  agency, which employs a large system of mortgage
  brokers. The mortgage broker has several options
  in which to work from he or she may work from a
  commercial or corporate office or they may choose
  to work from their home, which would make them a
  self- employed entity, working his or her own
  hours according to the needs of the customers.

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Thank You

• For more details, please visit
• http//mortgagesolutionsgroup.ca/second-mortgage/