What Can I Do with the Funds from a Second Mortgage?
With a second mortgage, you can gain funds by leveraging the equity you currently hold in your home. Once you pay off a certain amount of your house, you can borrow up to 85% of its worth. This money is generally used for improvement projects and paying off debt. Here are some ways you can get and utilize a second mortgage on your home. Call us today to learn more.
Uses for a Second Mortgage
People usually take out second mortgages for the following reasons:
Using your second mortgage for debt consolidation can help you obtain a lower rate for your debt than you are currently paying. For example,
if you have credit card debt, the rate you are paying to hold that debt is likely much higher than the rate you will pay on second
mortgages. Therefore, taking out a second mortgage will help you save money while paying down your debt.
Home improvement projects often cost more money than people have in their savings account to spare. So people take out a second mortgage to fund improvement projects that will increase the home's value. This works well, mainly when homeowners can later sell their homes for a higher price than the home improvement project added to its cost.
Many people opt for second mortgages over government loans for educational programs for themselves and their children. Taking out a second mortgage to increase your income will help you pay your loan off faster than if you had not had the education.
How Does a Second Mortgage Work?
Once you are approved for a second mortgage, it will generally come as a lump sum or a line of credit. People often choose the lump sum options when they know exactly how much money they need. Lump-sum payouts of a second mortgage are common when they are taken for debt consolidation and education. On the other hand, people looking to complete home improvement projects tend to opt for a line of credit because the amount they will need by the end of the project is unknown.
How do I Get a Second Mortgage?
You can visit the institution or broker that you have your current mortgage to take out a second mortgage. You can also look for brokers and other lending institutions. It is a good idea to shop around for the best rates, especially if the purpose of your second mortgage is to save on the rates you are currently being charged to hold debt. Get in touch with us to find out more today.