2nd mortgages and HELOC's

Question 1

What are other terms for 2nd mortgages?

Answer 1

1. Subordinate lien

2. Junior Mortgage

Question 2

What’s the difference between Home Equity Loans and HELOC’s?

Answer 2

Home equity loan - closed-end, and borrower receives a lump sum and does not continue to make withdrawals

HELOC’s - open-ended, and can continue to make withdrawals as long as equity payments continue.

Question 3

What kind of transactions are construction loans considered?

Answer 3

Interest only transactions.

Question 4

How do construction loans work?

Answer 4

They start off as a temporary loan to pay for the construction of the house, and then upon completion they turn into permanent financing.

Question 5

What is bridge financing?

Answer 5

It’s short term financing typically to help borrowers through a transition from an existing home into a new home when the existing home has not yet sold.

Question 6

What are Home Equity Conversion Mortgages? (HECM’s)

Answer 6

A reverse mortgage for those older than 62 who have little to no debt in their home. They are regulated and insured by HUD. It allows borrowers to receive monthly payments and/or to have a line of credit. Borrowers MUST complete counseling with an approved HECM counselor beforehand.

Question 7

What’s a proprietary mortgage?

Answer 7

Just like HECM’s, but are private mortgages that are more expensive, but allow borrowers to typically borrow more.

Question 8

What does the term “non-traditional” product mean?

Answer 8

Any loan that is not a 30 year fixed mortgage.