Home Equity

125% Home Equity: No Equity Second Mortgage Loans for First Time Home Buyers

A 125% home equity loan (also known as no equity loans, 125 home equity loans and 125 loans) is a second mortgage that requires no equity but the loan allows you to borrow up to 125% more than the current combined loan to value (CLTV) ratio of your home. The CLTV is the proportion of more than one loan secured by your home in relation to its value. This is different than loan to value (LTV), which only involves the proportion of a single loan in relation to its value.

Wikipedia provides these examples to help people understand the difference between LTV and CLTV:

Loan To Value: Property valued at $200,000.00 1st mortgage = $180,000.00 LTV = 90%

Combined Loan To Value: Property valued at $200,000.00 1st mortgage = $180,000.00 2nd mortgage = $45,000.00 $225,000 Total mortgage balance CLTV = 112.5%

125% loans are generally fixed interest rate installment loans, and they are particularly popular among first time home buyers who don't yet have equity in their homes for debt consolidation, making home improvements, buying furniture, landscaping, consolidation of auto loans, personal loans and other high-interest loans, paying medical expenses and college tuition. 125 loans may also be used for mortgage refinancing of a current second mortgage.

Even with rising interest rates, a 125% loan offers borrowers lower rates than credit cards and personal loans, and it may also provide substantial tax benefits. When used wisely, 125 home equity loans can be a relatively low-cost way to borrow money for big expenses and debt consolidation.

125% home equity loans are for those who plan to stay in their home until their property value increases significantly because the home cannot be sold unless the home equity loan is paid off in addition to the first mortgage. Also, because lenders face a higher risk of default due to there being no equity in the home, the interest rates are higher than those of a conventional home equity loan.

125% home equity loans typically require that the borrower has good credit. However, even if your credit is less than perfect, you may still be able to qualify for a 125% home equity loan. If not, you may want to consider mortgage refinancing or a standard second mortgage loan once your FICO credit scores improve.

Maria Ny, a free-lance writer from California, is highly respected for her published articles that covered a broad range of subjects ranging from Home Equity, Debt Consolidation, Bankruptcy Reform, Credit Repair to Real estate Financing. Check out her helpful articles online at Second Mortgage & Home Equity Loans Nationwide.

You can learn more about debt consolidation and home improvement financing for first time homebuyers and get specific loan program parameters. Get a free loan quote for a 125% Second Mortgage that requires no equity. We recommend that you get more details about the guidelines for Fixed Rate No Equity Home Loans because it could help lower your monthly payments by lowering the adjustable interest rates on credit cards.

Home Equity News:

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Home equity loans drying up for some - Personal finance- msnbc.com
Some homeowners are finding that even with great credit and 20 percent or more home equity, getting a line of credit on that equity can be difficult or impossible.
Equity in Americans? homes falls to historic low - Mortgage Mess ...
The equity Americans have in their most important asset ? their homes ? has dropped to its lowest level since the end of World War II.
Use of home equity hits a four-year low - Real estate- msnbc.com
The amount of money Americans pulled out of their homes is at a four-year low as homeowners battle falling home values and stricter standards among lenders, Freddie Mac said ...
Morgan Stanley to freeze home-equity lines - Mortgage Mess- msnbc.com
Morgan Stanley told thousands of clients this week that they will not be allowed to withdraw money on their home-equity credit lines, according to a news report.
Late payments for home equity loans rise - Real estate- msnbc.com
Late payments on home equity loans climbed to a 1˝-year high in the opening quarter of this year, while delinquencies on credit card bills fell, painting a mixed picture of how ...
Late payments rise on home-equity loans - Stocks & economy- msnbc.com
Late payments on certain auto and home equity loans climbed in the final quarter of last year, while delinquencies on credit card bills largely held steady, suggesting some U.S ...
BofA tackling debt worries by cutting home-equity lines - Top Stories ...
Bank of America Corp. is tightening up its home-equity lending business, turning down applications and turning off credit lines in struggling housing markets.
Should I get a home equity credit line? - Answer desk- msnbc.com
Free money In this week's video Answer Desk, msnbc.com's John W. Schoen has some advice on how to avoid giving the government more of your money than you need to.
Morgan Stanley to freeze home-equity lines - Today Technology & Money ...
Morgan Stanley told thousands of clients this week that they will not be allowed to withdraw money on their home-equity credit lines, according to a news report. ... Morgan Stanley ...
The New Yorker: When owning isn?t better - The New Yorker- msnbc.com
The housing boom undoubtedly makes lots of first-time home buyers happy. Unfortunately, it may end up prolonging the current downturn. By  The New Yorker's James Surowiecki.

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