There are many reasons that you may choose to take out a second mortgage on your home. You may need to send your child to college and don’t have enough in savings to cover the cost of tuition or you may need to make some major repairs to your home. Deciding if a second mortgage is right for you is difficult and deciding which second mortgage is the one you need can be even more confusing.
There are two types of second mortgages. These are home equity loans and home equity lines of credit, also called HELOC. Both of these loans allow you to turn your home’s equity into cash that you can use on a myriad of items. You can use them to pay off your credit card debt, send the kids to college, make home renovations, paying for accumulated hospital bills or even taking a luxury vacation. The interest on both of these types of loans is generally tax deductible.
A home equity loan works like a traditional loan. The loan amount is secured by your home, just as your primary mortgage is secured. This means that if you were to default on the loan then your home could be foreclosed upon by the lender. These loans, similar to a primary mortgage, can also be financed over a long period of time to allow you to set the payments at a price that is convenient for you.
A home equity line of credit is a revolving line of credit. Similar to a credit card or other personal line of credit, these loans can be used to pay for long-term expenses. You draw out a certain amount and then you pay it off. Then you can draw out more and then pay that off. You don’t find yourself in long-term debt, but you have access to the funds whenever you may require them. Depending on your equity, these loans are excellent for long-term home improvement projects or paying for your child’s college tuition.
Before taking out any loan it is a good idea to shop around and talk to a reputable second mortgage broker. They will discuss your loan options and help you decide which one is best for your personal situation.
Recommended Second Mortgage Lenders Online - We maintain a list of recommended mortgage companies online and update the list regularly.
Second Mortgage Lenders For People With Bad Credit - We also maintain a list of mortgage companies online who service borrowers with credit problems.