At what stage of the home-buying process should I visit Everett Credit Union?
It is best to visit ECU’s mortgage department before you even begin to shop for that new home. A basic pre-qualifying exercise will give you a feel for how much home you can afford. Mortgage pre-approval will take this one step better and will not only provide you with affordability information, but also will give you a leg up in the negotiation process.
What is a first mortgage?
A first mortgage is exactly that – the first loan on a certain piece of property. No other lien has been taken out on this home. When you first buy a house, the loan you typically receive is a first mortgage.
What is a second mortgage?
A second mortgage is also what it says – the second loan against a specific piece of property. Let’s say you have a first mortgage on your home. The value is $100,000 and you have a $60,000 balance left to pay on your loan. The $40,000 difference is considered equity, or the part of the home that you own outright. If you wish to further borrow against that $40,000, you would be taking out a second mortgage on the home in order to do so. Why borrow against this equity? In many cases, the interest rate you pay on your mortgage is lower than many other types of loans. Interest is also frequently tax deductible for a first or second mortgage, but not necessarily for a car loan or a credit card. (Consult your tax advisor for more information on tax deductibility and home loans.)