A second mortgage is an additional loan on your home subordinate to the primary mortgage on the property. Homeowners take out a second mortgage for a number of reasons, such as to improve their home, to consolidate their debts, or to purchase an additional home or investment property. The loan is called a second mortgage because if the homeowner defaults on the loans, the primary mortgager would get paid first before any money goes to the second mortgager.
There are several reasons why you might consider taking a second mortgage on your home.
There are several disadvantages of taking a second mortgage on your home.
Second mortgages are not hard to find and it’s in your best interest to first speak with the bank or lender that holds your first loan. Next, check in with a credit union or local community bank that is happy to take your business away from the bigger banking institutions. Be sure your credit score is high and your credit history is clear before applying. Also make sure that the repayment terms are something you can handle in light of your other monthly financial obligations.
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