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Second Mortgages: A Great Way to Get Some Extra Cash

Every homeowner has been in this situation. After paying off the down payment for a home for sale and having no problems paying off the home mortgage loan payments, they suddenly find themselves in need of extra cash. Whether it’s medical bills, buying a new car, home renovations, or paying off a child’s college tuition, homeowners often find themselves in a bit of a financial squeeze. However, there is hope, as you can cash in on your real estate investment by taking out a second mortgage! Second mortgages refer to a financial process in which a homeowner is able to borrow money by using their home as collateral. In most instances, a homeowner is able to borrow the difference remaining between the home’s market value and the remaining debt left on the homeowner’s home mortgage loan. Depending on the homeowner’s need, a second mortgage can be taken out in two ways. For homeowners who require a large lump sum of money, they are able to take out a closed end second mortgage, which is a one time loan and prohibits further borrowing until the second mortgage is paid off. The other option for homeowners when taking out a second mortgage is to take out an open end second mortgage, which works like a line of credit.
A total is given to the number that a homeowner is able to borrow and the homeowner is to borrow small amounts of money at different times. Many homeowners are reluctant to take out a second mortgage, which is understandable as there is the possibility that they could lose their home. However, home mortgage lenders do not usually want to foreclose a borrower’s home and a homeowner is usually able to take on the added financial costs of a second mortgage. The key is through sensible financial planning. For many homeowners who take out a second mortgage, they are surprised by how easy the process is. While it is generally a bit more complicated for a homeowner to take out a second mortgage, home mortgage lenders understand that there is a growing demand for second mortgages. For this reason, home mortgage lenders are making it easier for homeowners to take out a second mortgage.
However, a general requirement for a second mortgage is that the homeowner has good credit. Still, there are some bad credit second mortgage plans available. When choosing a second home mortgage loan, it is important that you pick the right one for you. Second mortgages are available at either a fixed interest rate or an adjustable interest rate. By choosing the second mortgage interest rates carefully and the right length of time for a second mortgage, you will be able to use your home as a real estate investment and help you out.