There are many reasons why getting a second mortgage on your property makes sense. As a leader in the Non-QM mortgage market, we offer many Non-QM programs. A Bank Statement Second Mortgage is one of our popular loan programs as of lately. Most property owners have fixed in a good interest rate so cashing out to a higher rate just does not make sense.
Bank Statement Program
The Bank Statement Program is designed for those borrowers that can’t provide conventional income to calculate ratios. Using 12 months or 24 months bank statement is our way of calculating ratios. We don’t require any income docs, just 12 or 24 months of bank statements.
Second Mortgage Terms
Unlike its sister program, the HELOC (Home Equity Line of Credit,) which works like a line of credit, the Second Mortgages are a fixed rate product with terms ranging from 10, 15, 20 and 30 fixed rates. The entire amount is drawn at closing and a monthly payment is due every month until the entire balance is paid off.
Credit Score Requirements
Second Mortgage credit score requirements are a bit more flexible than the Home Equity Line of Credit, which requires at least a 680 middle score of 3 bureaus. The minimum score requirement for a second mortgage is 660, with a few exceptions and must have excellent compensating factors. With those scores, the loan-to-value is caped at 65%. But, if scores are above 720, we can lend up to 90% of the value of your property.
Occupancy Types
The Second Mortgage offers financing for primary residences, second homes and investment properties. The investment property loan-to-value is caped at 85%, where as the primary residence and second home limit is at 90% value of the property. As a leader in the Non-QM market, we offer alternative type mortgage products to our clients and offering the Second Mortgage for investment properties is definitely one of our best niches.
Besides being able to offer Second Mortgages on investment properties, the program also comes with no pre-payment penalties. So, if you want to pay off the Second Mortgage sooner, you have the capability without any penalties for early pay off and the no pre-payment option applies for all company types including investment properties.
Loan Amounts
For the fixed-rate Second Mortgage option, our minimum loan amount is $50,000 and our maximum loan amount is $550,000. If you are looking to pull more equity for your property, then consider a Home Equity Line of Credit (HELOC,) which carries a maximum loan amount of $2 million based on a 50% loan-to-value with at least 680 minimum credit score.
Appraisal Agreements
We need to know the value of your property. There are a few ways that we can determine that. For starters, if you have an appraisal that is less than 12 months old, then all we require is a desk review. A full appraisal is not necessary. If there is no appraisal, then we have to order a full appraisal. For HELOCs, if the loan amount is less than $400,000, no appraisal is necessary. Keep in mind that this is only for HELOCs, for Second Mortgage’s, a full appraisal is required.
