When Can I Get Another Mortgage?
There are a number of reasons you may need to get another mortgage, life throws curveballs at us all the time. So, the reasons you need another mortgage can be many: foreclosure, desire for a second home, need or want to relocate within your existing city, or move out of town all together.
Fortunately, no matter the situation, there is a mortgage solution for you. Let's take a look at when you can get another mortgage and where it may benefit you.
1. Refinancing
If you're an existing homeowner and are looking to reduce your mortgage interest or perhaps consolidate debt, refinancing may be a great way to go. Refinancing is a simple way to reduce either the amount of time you pay off your existing mortgage or structuring a mortgage for a significantly lower interest rate.
On the other hand, you may choose to consolidate some of your debts such as credit cards or vehicle loans through a cash-out refinance. In this situation, you take out the amount needed to pay off your mortgage plus cash to pay off the other obligations you'd like to resolve.
You'll likely find formidable refinancing options only after the equity you've paid into your existing mortgage outweighs the principal remaining. If you're on the top side of your mortgage looking down, it may be time to refinance.
2. Foreclosure or Bankruptcy
One of the more unfortunate circumstances for needing a new mortgage is bankruptcy or foreclosure. While you certainly aren't penalized for life by filing for bankruptcy, there is a waiting period for virtually all loans before you can take out another mortgage.
Generally, you can take out another mortgage in 3 years after your bankruptcy proceedings are closed. Extenuating circumstances, deemed such by a team of underwriters, can reduce the number of years you must wait to 2 to 4 years before taking out another mortgage. There may be good news in store, though, in May of last year it was announced that Fannie Mae would reduce the waiting time to two years.
Realizing the need for a rebound in the housing market, many other mortgage backers may follow suit. Keep in mind, however, that a waiting period is established for a reason. If you fall into this category, take this opportunity to straighten out and solidify your finances.
3. Second Home
On the other hand, if your financial situation is such that a second home is in the mix, you may want to take out a mortgage. Second homes are often vacation homes, but they may very well serve as a second residences for businesspeople with offices in different parts of the country. In either case, a second mortgage may be necessary.
Much like a refinancing situation, a second home mortgage will depend on your debt-to-income, how much equity you have in your existing home, and your overall credit. A second home is basically a brand new mortgage independent of your first mortgage, and lenders will take a look at your financials to make sure you're a viable candidate for a mortgage.
4. Get Another Mortgage with the Help of a Professional
Getting another mortgage regardless of your circumstances can be tricky business if you aren't prepared to jump back into the mortgage market. By understanding the current mortgage climate and what interest rates are while getting your finances nailed down will help immensely when the time comes to get that mortgage again.
If you're coming off of a foreclosure or bankruptcy, make sure that your current financial situation will allow for a mortgage with some room to spare. If you're already a homeowner looking to refinance, do your homework and understand the true costs of refinancing a mortgage.
Lastly, but not least, get in touch with a professional. With the mortgage climate changing on a regular basis, there may be options for you to get another mortgage you never realized. Call a Loan Officer at Old Point Mortgage to discuss your financial situation and find the best financing option for you to get your mortgage.