| s are making the market for new loans sound so | | | | Plus, there is an origination fee, closing costs, and more. |
| good. Other types of loans are already on the market, | | | | Stay Where You Are |
| and understood. So, how do you get new people to | | | | With the extra charges, and owing considerably more |
| jump on your bandwagon? You offer something that | | | | than your house is worth, you can plan on not moving |
| sounds good, but one that not everybody yet | | | | anytime soon. This puts you in a negative equity |
| understands. That seems to be the case of the 125% | | | | situation. Many people who bought houses even last |
| home equity loan, too. | | | | year are finding out that this is not a good situation to |
| The Promise | | | | be in. It is possible, in a day of unstable housing |
| The promise that is made is to give you 125% of the | | | | markets, that your house could also be devalued |
| value of your house for a second mortgage. This way | | | | 'making it even harder, if not impossible to sell' for |
| you can enjoy having extra finances to use as you | | | | years more. It could also mean going into greater debt. |
| please. You can pay off other debt, fix up the house, | | | | It will also take you a few years just to recover from |
| combine both mortgages, go on a vacation, or | | | | the various expenses of the mortgage - let alone bring |
| whatever. The choice is up to you. | | | | your debt down to where you can make any profit on |
| What, though, is the truth behind a 125% mortgage? | | | | selling the house. And getting the downpayment for a |
| Here are some details. Some of these companies | | | | new house while you owe so much - don't even go |
| actually want to lend you more money than your | | | | there - it will only be in your dreams. |
| house is actually worth. Think about it. Are they really | | | | An even greater problem may occur if you have an |
| trying to help? With other lenders, it can actually be a | | | | adjustable rate mortgage. Sooner or later, there is |
| little difficult to get 80% of the value of a house (they | | | | going to be a rate increase, and it could be as much |
| are the smart ones). Why are these agencies trying to | | | | as 50% higher than it is now. |
| push extra money in your face? | | | | Compare |
| Extra Charges | | | | If you still want to consider a 125% mortgage, then be |
| A number of these companies charge 10% if you | | | | sure to compare one company's product with another. |
| want to get a lower rate of interest than what is initially | | | | You will be able to see the features that really stand |
| offered. That's just for starters. While they do offer | | | | out, and be able to see what features you may need, |
| lower rates than what credit cards usually go for, it | | | | or want. Be wary of mortgages that promise no fees, |
| actually may not be much more, since second | | | | because you can be sure that it has been added in |
| mortgages are typically more than a first mortgage. | | | | there somewhere - and probably more things, too. |