A second mortgage grants homeowners the ability to borrow equity from their home to gain financing. These funds can be used to pay bills, enhance the property and more.
The second mortgage is connected to the equity your current mortgage has built up, so it’s crucial to understand the ins and outs of a second mortgage before deciding to use it.
Advantages & disadvantages of a second mortgage
Advantages
- Lower interest rates in comparison to standard lines of credit.
- More financial wiggle room to invest in larger home renovations.
- You can use your homes’ equity without having to refinance the original mortgage.
Disadvantages
- Your mortgage lender may require a high credit score and debt-to-income ratio to qualify.
- Your home may be at risk if the home equity line isn’t paid back within contract guidelines.
- If you decide to sell your home, you may make less profit.
How do I get a second mortgage & what should I expect?
To take out a second mortgage loan, most lenders require a decent amount of equity to be built up on your home which is the amount you’ve paid towards the principal balance (the cost of the home plus interest).
After taking out the second line, you’ll need to have at least 20 percent equity still built up on your home. If you need this money fast, please note, it takes a few weeks for lender approval and the loan comes with fees.
If you’re unsure a second mortgage is for you, speak with your lender to explore your options and make adjustments as needed.
About the Author
Janie Schriewer
Welcome to the Janie Schriewer & Associates at RE/MAX Results. Janie just wrapped up her 30th year in the business & over that time has been adapting to the always-evolving Real Estate industry. In recent years she has added 2 members: Her Son Derek—Licensed Buyer & Technology Specialist, and Buyers' associate Melissa Kelley. We are all full-service REALTORS who can assist with selling your home and/or finding you your next home. The added professionals mean potential Clients have more convenience for showings & direct communication with Franklin County areas real estate Leaders.
Communication is crucial in Real Estate & Janie leads by example for our team as she prides herself on availability to her clients. Whether you prefer texting, phone calls, emails, or instant messaging, Janie Schriewer & Associates can accommodate. Whenever you want to talk to us or work with a REALTOR, the Schriewer’s have the experience & care to offer the right advice for your situation. We know the intricacies of negotiating a deal from the original offer to the signatures at closing as well as alleviating all of the hurdles that may arise in between. We treat you just like family. We care about you and what is best for you. Call Us today. Thank you as always for friends, past clients and customers we love referrals. Talk to you soon.