 Home > Finance > Mortgage > Second Mortgage
Home ownership allows you the opportunity to use that home as collateral for a second mortgage. Second mortgages can be used for anything that requires payment including high-interest debt, home improvement, entertainment, college funds, etc... The interest rate of a second mortgage is normally much lower than that of personal loans or credit cards because there is very tight competition in the lending industry.
Second mortgages are secured against your home, and your existing home equity is used to fund the loan. Your available home equity is the value of your property minus your mortgage balance. Depending on your credit profile, some lenders will allow you to borrow up to 125% of this equity in a second mortgage.
With mortgage refinance, you acquire a secured loan at a low interest rate to pay off another, higher-interest secured loan for the same property. You pay off your first mortgage and replace it with a lower-interest mortgage loan. People who have high interest rate mortgages could potentially save thousands of dollars through mortgage refinance.
When choosing the best debt solution for you, keep in mind that a second mortgage usually carries a higher interest rate than the first. If your current mortgage rate is higher than you would prefer, mortgage refinance may be a better option for you. Common alternatives to second mortgages include home equity loans and home equity lines of credit.
|