| A second mortgage, or a home equity loan, is a | | | | second mortgages, there isn't quite as much |
| good option if you've got climbing debt and some | | | | paperwork, or as much time to wait for approval. |
| equity built up in your home. Taking out a home | | | | Since you have the collateral of your home you |
| equity loan or a home equity line of credit may be | | | | represent a lower risk to the lending institution. |
| a viable solution for you, but only if you find the | | | | There are two types of second mortgages to |
| right second mortgage interest rate. | | | | choose from: the second mortgage loan and the |
| You can use the funds from your second | | | | second mortgage line of credit. Your second |
| mortgage or line or credit in order to pay off | | | | mortgage loan acts a lot like your first mortgage. |
| debt, do home renovations or consolidate your | | | | You receive a lump sum of money. The second |
| bills. However, if you're using it to pay off debt | | | | mortgage has lower closing costs than the first, |
| and you don't do anything to adjust the way that | | | | but you are also paying a higher interest rate with |
| you have been spending money then you'll end up | | | | the second mortgage. |
| overspent again in just a few years. Don't think | | | | The second mortgage line of credit acts like a |
| of a second mortgage as a band-aid to a bad | | | | credit card with a standard credit limit, but a line |
| spending habit. Take out the second mortgage | | | | of credit has a variable rate. The interest will |
| but also start using a family budget and control | | | | change depending on the month, which can be |
| frivolous spending. | | | | really great when interest rates are low like they |
| That being said, getting a good second mortgage | | | | have been lately, but difficult if they are high. You |
| interest rate is definitely possible even in today's | | | | can use your line of credit as long as you have |
| market where interest rates are starting to climb. | | | | funds, but there is a cap to how much you can |
| Even with the increases, they are still lower than | | | | spend. At a certain period of time, 5, 10 or 20 |
| they were ten to fifteen years ago. If you have | | | | years in the future, you won't be able to borrow |
| an older home, it's still a good time to take | | | | on the line of credit any longer and you'll have to |
| advantage of the equity built up in your home. | | | | start making standard monthly payments. Up until |
| Getting a good second mortgage interest rate is | | | | that point, you can pay off as much or as little as |
| easier than applying for your first mortgage. With | | | | you'd like to each month. |