Follow Us Here:Mortgage Lenders Plus on Facebook
Mortgage Lenders, Home Mortgage Lender, Home Loan Lenders, Mortgage Lenders Plus.com! Mortgage Lender, Home Mortgage Lenders, Mortgage Lenders Plus.com!
 
Mortgage Application Mortgage News Mortgage Calculators Home Equity Loans Mortgage Loans

125% 2nd Mortgage

A 125% second mortgage is a loan that, when added to the amount you owe on your original mortgage, amounts to 125% of the home's current appraised value. It is the ultimate "cash out" home equity loan - except for the fact that much of the loan has no equity securing it at all. The 125 second mortgage is an option that generally falls to people who are strapped for cash and are willing to risk their home to get out of the jam.

A home equity loan - another term for a second mortgage - is a loan that allows the homeowner who has accumulated equity in his/her house to convert that equity to cash by borrowing against it. The 125% second mortgage takes the notion beyond equity, and creates a loan that puts the homeowner in a position of owing more on the house than it is worth. While the cash may be an absolute necessity, the consequences of a loan like this can be severe.

Because these loans are not really secured by equity, the interest rates on them can run as much as six percent higher than standard second mortgages. Furthermore, much of that interest is not going to be tax deductible. The IRS allows for tax deductions on home loan interest for loans of up to 100% of the home's value. The interest on that extra 25% is not deductible. A 125% second mortgage provides cash at a high premium and without the deduction benefits of a true mortgage.

The presence of a second mortgage on your property may hinder your ability to refinance the first mortgage, should interest rates improve and provide a financial opportunity. The holder of the second mortgage must provide permission in order for the homeowner to refinance the first. Some will be agreeable, others will charge a fee, and still others will decline.

The other major negative impact of a loan that has a unsecured portion is that should you need to sell the home because of job relocation or some other reason, you will have to come up with the cash balance owed the lenders after the home has been sold. If you owe 25% more than it is worth, you will need a substantial bundle of cash in order to get out from under the home.

These loans were created in the heyday of rising home prices. Today, they carry additional risk because home prices and sales have leveled off. It is never a good situation to owe more than your home is worth - it constricts your personal options and the money you have borrowed is both expensive because of high interest rates and because there is no deduction for those interest payments.

Request Quote
View Privacy Policy
Mortgage Calculators

Fixed Rate vs. Interest Only
Mortgage Loan Payoff
Simple Mortgage Calculator
Mortgage Loan Comparison
Savings Goal Calculator

View mortgage calculators >>
Mortgage Tools & Help

Mortgage Identity Theft
Glossary of Mortgage Terms
Ask a Mortgage Lender
FREE Mortgage Quotes
Find a Real Estate Agent
Find a Real Estate Appraiser
Predatory Mortgage Lending
Basic Mortgage Checklist
Rates & Mortgage Calculator
updated Sunday, December 10, 2017

Mortgage Type Today Last Week Change
30 yr fixed 6.03 6.24   0.035%
15 yr fixed 5.47 5.72   0.046%
5/1 ARM 5.34 5.43   0.017%
3/1 ARM 5.48 5.42   0.011%
Your dream of home ownership, refinancing, or using your homes equity might
just be an application away. Simply fill out our short form and get quotes from
mortgage lenders near you!

Simple Payment Calculator
Loan Amount
Interest Rate
# of Years

Mo. payment
Total Interest
See more mortgage calculators
   
Mortgage Lender, Home Mortgage Lenders, Mortgage Application
Choose Your State's Mortgage Lender Guide
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
D.C.
Delaware
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming

About | Contact | Webmasters | Sitemap | Feedback | Mortgage Help | Mortgage Loans |
Home Equity | Internet Mortgage Leads | Lender Login

Mortgage Lenders Plus.com is an advertiser supported mortgage lender directory. Copyright 2000 - 2017, Mortgage Lenders Plus.com. All rights reserved. Use of this website constitutes acceptance of our updated privacy and disclaimer policies.

Comodo SSL        Mortgage RSS