What Are the Pros and Cons of getting a Second Mortgage?
What Is a Second Mortgage?
A second mortgage is a loan that uses your home as collateral to repay off the first loan before it goes into foreclosure. At 1onefund, we can help with all your mortgage financing needs. Contact us today to discuss your specific requirements or to find out more information.
Pros of getting a second mortgage:
- From home renovations to college education and buying a vehicle, a second mortgage allows you to afford things that you would not usually afford.
- You get immediate access to cash at a favorable interest rate. 1onefund generally offers second mortgages at very excellent rates, depending on the value of your property.
- The interest you pay on a home equity loan is tax-deductible.
- Getting a second mortgage for home renovations can help increase the value of your home.
- You can gain access to low-interest loans. As a borrower, you can have up to 30 years to repay your debt.
- Since your loan is secured by your home, second mortgages allow you to borrow significant amounts.
Cons of getting a second mortgage:
- The fees of a second mortgage can be astronomical, they aren’t free. You have to pay appraisal, application, and closing costs as well. Some lenders charge a monthly maintenance fee as well.
- The major con of getting second mortgages is as borrowers your most important asset is at risk – your home. If you are late on your monthly payment or default, your lender can foreclose. When looking to apply for a second mortgage keep this in mind.
- Applying for a second mortgage can be very time-consuming because the lending criteria are complex and tough.
- Your credit score, employment history, debt to income ratio will be taken into consideration when setting up your interest rate. If your credit score is poor, you might end up paying higher interest rates than anticipated.
- While the interest rate of a second mortgage rate is typically lower than unsecured lines of credit, they may be slightly higher than your first mortgage. Any time you borrow money, you are paying interest. The second mortgage lender is taking a higher risk than the lender of your original purchase loan.
- Like your first loan, second mortgages come with expenses and fees associated with the legal process.
Speak to our team today:
To find out more information about second mortgages, or to discuss your second mortgage needs with our specialist, do not hesitate to give us a call today.