will be approved based on the information provided. They have an excellent income, a stable job and their home still has lots of equity room to work with in terms of taking on additional debt. The applicant has stated that they would like to arrange for a second mortgage however there may be other better options that they should consider before reaching a final decision regarding this mortgage. A mortgage office with the bank will be happy to help them compare various options to find the best arrangement for this couple. If their current mortgage is open or can be repaid in full without significant penalties, they may be better off arranging for a new 1st mortgage on their home for the full amount of the existing mortgage plus the second mortgage they are looking for. Unfortunately they did not provide sufficient information to allow us to complete the calculations to determine which option would be best for them. We have provided the interest rate and associated payments for the second mortgage as requested at the bottom of this post. Note that often a second mortgage will require a higher interest due to the perceived higher risk of second mortgages. Second mortgage holders are only paid after the first mortgage holder has been paid in full. We have also provided this calculation as well.
We also assumed that they would wish to look at a single mortgage for the full amount of the debt they wish to take on and provided the calculations of interest payable and the monthly payment required as well. The applicant can compare his current monthly payment on his existing first mortgage plus the new payment for the $75,000 second mortgage with the this last calculation of the total debt requirement. This may be a good solution for them and save them money at the same time.
Finally this is also a good lesson for this applicant as well as readers of this post, regarding credit cards. Credit cards command a high interest rate and as a result, the interest payments are very high if you plan to carry a balance beyond the grace period they provide. Arranging for a second mortgage or refinancing an existing mortgage is a far better approach to take in terms of reducing interest payments. Even a personal loan is better than carrying a balance on a credit card!
Home/Mortgage Loan Amount :: $75,000
Home Loan Application and Processing Speed (when do you need the funds):: We are consolidating debt on loans and credit cards into one low interest mortgage. We would like to do this quickly so that we reduce the interest we are paying on these loans.
Do you currently have a mortgage? ::Yes , I have a 1st mortgage of $249,000 on my home and would like to add a 2nd for $75,000
Bank Name and Branch :: Citibank, Oakland Chinatown
What City/Town, State and County do you live in? :: Oakland, California
Zip ::94607
What is your employment field? :: Cisco Engineer
Employment Position :: Technical Lead, Network Design
When are you paid? (monthly/weekly/biweekly):: Biweekly
Your credit rating to be – excellent, fair, or bad? :: Excellent
How did you find us? :: surfing on the web
How are you paid? (direct deposit/paper check)::Direct Deposit
Gross Amount Per Paycheck :: $5700
Do you agree to have this information published online, without your PRIVATE information of course? :: No
Extra information here please (some detail)::I have been working at Cisco for the past 5 years, recently as a team lead in the network design area. Prior to this current position I was one of the team members working on one of Cisco’s new routers for the consumer market. We have an existing home with a mortgage on it and we plan to stay in this home for the foreseeable future. Although the market has been up and down from a real estate perspective, we live in a desired area and as a result our house value has not plummeted in the same manner that many other areas have. We believe that our home is worth in excess of $750,000 and the current mortgage is only $249,000. We are planning to add another $75,000 as a second mortgage which will make the total $329,000.
Note to Lender :: We have applied for a second mortgage, however we may be better off refinancing and going with one single mortgage. We might be eligible for better interest rates on the mortgage and the payments may be lower. Please advise regarding what our options might be.
The reason for our application is that we have a number of credit card balances that we want to pay down and in addition we would like to complete some maintenance and upgrades to our home. We have already started and used our credit cards for this purpose. Unfortunately the interest rates are very high for credit card balances, hence the application for a 2nd mortgage. We are open to suggestions regarding the best approach to dealing with our financial requirements.
| Category: Home Mortgage Loan | APR 4.95% | APR 5.95% | APR 4.95% |
| Loan Principal | $75,000 | $75,000 | $329,000 |
| Payment Schedule | Monthly | Monthly | Monthly |
| Length of Term | 30 | 30 | 30 |
| Amount to be paid | $130840.07 | $142120.89 | $573951.77 |
| Total interest paid | $55840.07 | $67120.89 | $244951.77 |
| Paid per installment | $358.47 | $389.37 | $1572.47 |
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Predatory Lenders is a term to describe -----------------------------------------------------------------------------------------------
