| A second mortgage, or a home equity loan, is a good | | | | represent a lower risk to the lending institution. |
| option if you've got climbing debt and some equity built | | | | There are two types of second mortgages to choose |
| up in your home. Taking out a home equity loan or a | | | | from: the second mortgage loan and the second |
| home equity line of credit may be a viable solution for | | | | mortgage line of credit. Your second mortgage loan |
| you, but only if you find the right second mortgage | | | | acts a lot like your first mortgage. You receive a lump |
| interest rate. | | | | sum of money. The second mortgage has lower |
| You can use the funds from your second mortgage | | | | closing costs than the first, but you are also paying a |
| or line or credit in order to pay off debt, do home | | | | higher interest rate with the second mortgage. |
| renovations or consolidate your bills. However, if you're | | | | The second mortgage line of credit acts like a credit |
| using it to pay off debt and you don't do anything to | | | | card with a standard credit limit, but a line of credit has |
| adjust the way that you have been spending money | | | | a variable rate. The interest will change depending on |
| then you'll end up overspent again in just a few years. | | | | the month, which can be really great when interest |
| Don't think of a second mortgage as a band-aid to a | | | | rates are low like they have been lately, but difficult if |
| bad spending habit. Take out the second mortgage but | | | | they are high. You can use your line of credit as long |
| also start using a family budget and control frivolous | | | | as you have funds, but there is a cap to how much |
| spending. | | | | you can spend. At a certain period of time, 5, 10 or 20 |
| That being said, getting a good second mortgage | | | | years in the future, you won't be able to borrow on the |
| interest rate is definitely possible even in today's | | | | line of credit any longer and you'll have to start making |
| market where interest rates are starting to climb. Even | | | | standard monthly payments. Up until that point, you can |
| with the increases, they are still lower than they were | | | | pay off as much or as little as you'd like to each |
| ten to fifteen years ago. If you have an older home, it's | | | | month. |
| still a good time to take advantage of the equity built | | | | Just like with your first mortgage, you'll want to shop |
| up in your home. | | | | around to get the best second mortgage interest rate. |
| Getting a good second mortgage interest rate is | | | | Determine whether a loan or line of credit would be |
| easier than applying for your first mortgage. With | | | | best for you, and then take steps to improve your |
| second mortgages, there isn't quite as much | | | | overall financial picture by using the equity in your |
| paperwork, or as much time to wait for approval. | | | | home. |
| Since you have the collateral of your home you | | | | |