Higher Living Real Estate, LLC
Kay Wallace, Higher Living Real Estate, LLCPhone: (843) 516-0255
Email: [email protected]

Second mortgages - Are they worth it?

by Kay Wallace 10/06/2024

Major pros & cons of a second mortgage  featured image

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
Author

Kay Wallace

I am passionate and dedicated to achieving results that enhance your lifestyle and well being. If you’re looking for a realtor that listens to your needs, responds quickly and has your best interest in mind, look no further. I will treat your money as if it is my own and help guide you in your real estate process with open eyes.

With over 15 years experience in the real estate industry, specializing in all aspects of the Residential Real Estate market to include resale, new construction, relocation, investment & first time home buying.

My real estate career is not just a business to me...it’s my Ministry.

I look forward to meeting you!