A Second Mortgage takes your home equity, which is the net value of your home that you own outright. Basically, it’s the fair market value of your home minus what you owe on your mortgage. For example, if your home is worth $200,000, and the balance remaining on your mortgage is $120,000, then your home equity is $80,000. You own $80,000 of your home free and clear.

Your property is pledged to the lender as security in case you don’t pay back your loan. Borrowing against your home equity will reduce your home equity. So, for example, if you borrow $20,000 against your $80,000 home equity, your home equity is reduced to $60,000 until you pay back the loan. You can use our online calculators to see how much you can borrow, check interest rates and calculate estimated monthly payment.
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Homeowners use second mortgages to:

• Pay off debt, such as credit cards, vehicle loans, and other debts.
• Make home improvements, room additions or to add a pool.
• Upgrading kitchens with new cabinets and appliances.
• Financing an education.

There’s another type of loan that uses the equity in your home. It’s a Home Equity Lines of Credit: Similar to a Second Mortgage, with a Home Equity Line of Credit, you also borrow cash against the equity in your home. However, there are a couple of differences to note.

• You’re given a line of credit that may be accessed by future draws up to a set amount. Using a checkbook to access your account as many times as you like during the access period up to your credit limit.
• The interest rate is variable instead of fixed. This means the interest rate can change depending on how the national interest rate moves.

Once you have decided that a Second Mortgage loan is right for you, you will want to organize documentation that you will need to apply. Some documents you will need include:

Your social security number and current address information

Pay stubs covering 30 days, plus W-2 forms.

Name and address of your current mortgage lender.

Current estimated value of the property.

The original purchase price of the property and date of purchase.

Account numbers and balances of any checking, savings, IRA, CDs or Money Market accounts.

For a more complete list of documentation, you will need to provide you can print our Loan Preparation Checklist!

Continue reading for more information on “Rates and Points” that you will need to know about in order to be better prepared for a California Mortgage Loan!

Use our quote form, a mortgage feature on California Mortgage & Home Equity Loans, Co. to locate a lender in your area offering the mortgage product that best suits your needs. The independent lender you select will work with you to help find a low-cost mortgage that meets your needs. Apply today!