You may have more options than you think.
Your home’s equity is a valuable financial resource, especially if you’re looking to fund a home renovation, pay down high-interest debt, or achieve another goal. Depending on your needs, a second mortgage may be a way to reach those goals.
What is a second mortgage?
A second mortgage is a loan that allows you to borrow from your home equity using your house as collateral. You then pay that loan back in addition to your regular mortgage payment. The application process mirrors that for getting a primary mortgage, which means:
Why should I consider a second mortgage?
If you have debt with high APRs (like credit cards), a significant portion of your payments may go toward interest, not principal. That means it can take years to pay off that debt. Second mortgages have significantly lower rates than typical credit cards, which means you can pay off that debt faster.
And since certain home renovations can add substantial value to your home’s resale price, a second mortgage may be a great option for getting your home ready to go on the market, even if you don’t have a specific selling timeline in mind.
Are there limits to how I can use the money from this loan?
No! You can use it for anything you want, including financing education for yourself or a family member, paying for a wedding or travel, or any other need.
Is there any risk involved?
Because the loan is secured by your home, defaulting on a second mortgage could result in foreclosure, and if you sell your house before the loan is paid off, the amount you owe will be deducted from any profit. That’s why it’s important to talk with a qualified home loan professional (like me) to understand if this is right for you.
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