2nd Mortgages
A second mortgage is another mortgage against your home.
It doesn't have priority of the first mortgage in the event of default. So, it
isn't as secure as the first mortgage. There is more risk to the lender in this
loan.
Reasons for a second mortgage
Sometimes you need extra cash! If you have
equity in your home and decent credit you can usually get a second mortgage. The
amount of equity you have in you home will generally be the amount of money you
can get. Home improvement, debt consolidation, down payments for additional
properties, and college funds are a few of the reason for second mortgages.
2nd Mortgage - Downsides
There are some negatives to second mortgages.
- Two mortgages against your home. They must be paid.
- Second mortgages have higher rates than first mortgages
- Closing and loan fees are higher.
If you have equity in your home and really need
cash this is a good option. The interest is typically tax diductible.
You can get second mortgages in the same form as
first mortgages.
- Fixed 10/20/30 year.
-Balloon
-Variable APR