| A second mortgage can also be referred to as a | | | | range. But the interest rate on a this type of secured |
| home equity loan. It is in essence a secured loan that is | | | | loan will be lower then on an unsecured loan, such as a |
| second, or subordinate, to the first mortgage against | | | | car loan, and much, much lower then you will find on a |
| the property. The key issue for anyone getting this | | | | credit card. |
| type of loan is the amount of equity they have in their | | | | The common reasons to get a home equity loan are |
| home. This will ultimately determine the amount of | | | | to pay off high interest credit cards or other higher |
| money that can be secured for the home owners use. | | | | interest rate debts, refurbishing the home, urgent family |
| Equity is the amount of money that is paid down on | | | | matters such as education, medical, etc. This is called |
| the home, or it can be the value of the home minus | | | | debt consolidation and refinancing and is a good way |
| any loans owed on the home. The main reason for | | | | to tap the asset value of your home to meet your |
| taking out a second mortgage is to take equity from | | | | investment and budget needs, and helps you avoid |
| your home and turn it into cash in pocket. What this | | | | incurring high interest unsecured debt like credit cards. If |
| means is that if you have enough equity in your home | | | | you have extensive credit card debt, and are not |
| you can borrow money using your home as collateral. | | | | making progress in paying it off on a monthly schedule, |
| There are three basic types of loans to choose from: | | | | a second mortgage may be a good move. |
| the traditional second mortgage, a home equity loan, or | | | | There are a couple of things that anyone getting a |
| a home equity line of credit. | | | | home equity second mortgage should be aware of. A |
| A second mortgage should not be confused with a | | | | second mortgage puts a second charge on your |
| mortgage refinance or re-mortgage. When you | | | | home, meaning that the second mortgage provider can |
| refinance your first mortgage you are replacing your | | | | take a share of any proceeds if your home has to be |
| old loan with a new loan, usually at a better interest | | | | sold. What is worse, if you pay the first mortgage but |
| rate. A second mortgage, or home equity loan, is | | | | fail to pay the second, that mortgage provider can |
| another loan in addition to the primary loan, which will | | | | seize your home, even if the sum involved is relatively |
| result in two monthly payments. It is important to | | | | small. |
| distinguish the two to make sure that two payments | | | | Getting a second mortgage home equity loan can be |
| will not seriously affect your monthly budget. | | | | a good way to use the equity in your home to do any |
| The interest paid on a second mortgage, up to the first | | | | number of things. Like all financial decisions using a |
| $100,000 borrowed, is tax deductible provided that the | | | | second home loan should be carefully considered in all |
| loan is on your primary residence. It should be noted | | | | aspects. If it makes sense and fits within the monthly |
| that interest rates on home equity loans are generally | | | | budget then it is something to be strongly considered. |
| higher than a first mortgage, usually in the 2-4% higher | | | | |