We all want to own property. Some of us dreamed of having a house from a very early age but of course we never know anything about mortgages, home loans, bonds and terms like debt consolidation. So what it is a mortgage? Is it as complicated as it sounds?

The simple answer is no. It is all very simple. The mortgage amount is the amount of money you borrow from a lender to pay for your house. Home loans are self explanatory but what is debt consolidation? The easy answer is also this. Debt consolidation means that we can get a second mortgage on our home. By getting a second mortgage we can pay for other debt that we might have. That is called debt consolidation.

The bank or the lender that will give you a mortgage on your home will ask for security. Now this is easy because the house itself serves as security for the bank. What this means is that if you are not able to pay off your mortgage the way you and the lender agreed on, the lender (e.g. bank) will take your house and sell it. That way they are able to pay off the mortgage amount you initially applied for.

Getting a low interest rate on your mortgage is crucial. When you apply for a mortgage loan the lender will determine the interest rate. The mortgage interest rate depends on your capability to pay the lender back. If you are young and havent had any debt in the past the chances are that the lender will classify you as a high risk client. The reason for this is because you dont have a credit record for them to know if you will be able to pay back your mortgage amount. Therefore they will either turn your application down or give you a high interest rate.

There are 2 types of mortgage home loans. The first is a fixed interest rate mortgage home loan. This means that the interest rate that you are paying will stay the same for the duration of the mortgage period. The other type is a flexible mortgage home loan interest rate. The flexible interest rate will go up or down depending on the current market conditions and national economy. Consequently, your mortgage home loans term may go up or down but the monthly mortgage payment will remain same.

In order to get a mortgage you will have to complete a mortgage application form. In this form you will need to fill in information such as your personal details, income details, credit history and the details of the property that you propose to buy. After you have completed the mortgage application form a surveyor will survey the property and evaluate it. By doing this the lender will establish if the property is worth the amount of the mortgage. On successful verification, you will be granted the mortgage loan amount to purchase your home.

As you can see there is really nothing to it. The bank or some other kind of lender will do this all for you and make it very easy.

2nd mortgage: A Loan Lovelier the Second Time Around?

Most average Americans are able to buy their own homes through a mortgage. And, while paying off the first mortgage, other needs for money arise for necessities such educational plans for the children, cash for improving the house, money for capitalizing on a small business or money to pay off personal debts. A 2nd mortgage can even be used to pay off the first mortgage.

A 2nd mortgage is usually based on the equity - your interest, as an owner, on your home based on the mortgage payments you have paid and the increased value of your home property.

Aside from it being a second to the first mortgage, a 2nd mortgage is different from a first mortgage in terms of interest rates. A 2nd mortgage usually has a higher interest and is usually paid in a shorter time. Aside from this, a single large payment called balloon payment is also made at the end of the paying period

Usually, refinancing is an alternative for 2nd mortgage especially when interest rates are low because higher rates apply on 2nd mortgages than on the first one. On the other hand, there are other features of a 2nd mortgage which makes it more appealing than refinancing. This includes the looser contract guidelines which reduces the amount of time and effort to get that 2nd mortgage. Apart from this, 2nd mortgage may have lower transaction costs that can override the higher interest and which may also, in the long run, cost less than getting a refinancing.

Traditionally, a 2nd mortgage has established repayment schedules and is offered as a fixed loan. But, at present, there are three options from which you can choose from. These are: the traditional 2nd mortgage, a home equity loan and home equity line of credit. We will discuss the features of each briefly below

a. 2nd mortgage. This loan is ideal for situations where you need the money in lump form especially for home improvement. 2nd mortgage can be found as either fixed-rate or adjustable from 5 to 20 years but typically 15 years. Seventy five to eighty percent of the appraised value of the home is the loan limit for both merged loans.

In a 2nd mortgage, interest rates are higher than that of the first mortgage especially if this is a fixed 2nd mortgage. Adjustable 2nd mortgage, on the other hand, have lower interests but have higher margins. Loans usually closed in two to three weeks and the amount to be paid during closing is usually two to three percent of the total loan amount. Requirements needed when applying for a 2nd mortgage include home appraisal and credit check.

b. Home Equity Loan. A home equity loan is like the traditional 2nd mortgage but is different in 2 ways. First, unlike 2nd mortgage, this has lower interest rates and second, lenders can waive off closing costs. Most types of this loan being offered are adjustable in the market.

A home equity loan is typically used for home improvements and renovations just like a 2nd mortgage and it can also be used to finance a business.

c. Home Equity Line of Credit. This type of loan is ideal for cases where there is a need for funds periodically such as for debt consolidation or for payments of college plans or tuition fees. Just like in a 2nd mortgage, a credit check and a home appraisal is required before you can receive this type of loan.

The loan amount is usually seventy five to eighty percent of the home's appraised value and the interest is adjustable. Some lenders waive off closing costs but others could total up to $1,000 plus points.

The loan amount is usually seventy five to eighty percent of the home's appraised value and the interest is adjustable. Some lenders waive off closing costs but others could total up to $1,000 plus points.