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More Information
Second Mortgage
Why Take Out a Second Mortgage?
Traditional Second Mortgage
Home Equity Line of Credit (HELOC)
Preparing Your Credit
Preparing to Apply
Understanding Fixed Rates
Understanding Adjustable Rates
Shopping for a Lender
Locking in a Rate
Understanding Points
High-Interest Debt: A Way Out
Paying for College
Home Renovation
Using the Internet to Research
Payment Comparison
An Affordable Monthly Payment
Private Mortgage Insurance
HELOCs and Monthly Payments
The Role of the Loan Officer
 

Why Take Out a Second Mortgage?


There are many reasons why a consumer would want to consider taking out a second mortgage loan on their property. Life can be unpredictable, and many people find themselves in need of cash for a variety of different reasons, including to consolidate their debt and pay a lower interest rate on it, to finance a child’s college education, to pay for home improvements, or to deal with an unanticipated expense such as a prolonged inability to work, mounting medical bills, or the cost of caring for an elderly loved one.

Whatever the reason, consumers who own a home and are in need of money often choose to take out a second mortgage. The advantages in doing so include: the obvious, access to needed cash, as well as, a tax deduction for interest payments. Note: Tax deductions are offered within certain parameters. Be sure to check with a tax professional or the Internal Revenue Service for the exact details. There is usually less paperwork involved in a second mortgage loan, although your lending institution will most likely require at least a basic appraisal of the property in question.

Closing costs for a second mortgage loan are not as expensive, because the escrow and insurance costs involved are usually minimal compared to an original mortgage. Your loan officer will review these expenses with you.

Once you have decided to take out a second mortgage loan, do some research online. Compare the rates and terms of several lending institutions before making a choice. Also consider the firm’s reputation and their customer service standards.

Choosing a lender you are comfortable with and can trust will make the second mortgage loan process easier and more efficient.