One certain thing is that there are plenty of reasons why you might need access to a large amount of money.
Assuming you’re thinking about going back to school, or you need to consolidate a few high credit card balances. Or perhaps you want to do some repairs on your home?
Why not consider tapping into your home’s equity, which is usually much larger than any cash reserves you have on hand? You may be able to use a second mortgage to take care of your expenses.
Although some mortgage companies doesn’t originate second mortgages, we’ll cover what you need to know about second mortgages and how they work.
And we’ll also lay out some financing alternatives, such as a personal loan or cash-out refinance, that could be better choices for you.
What Is A Second Mortgage?
A second mortgage is a lien taken out against a property that already has a home loan on it. A lien is a right to possess and seize property under specific circumstances.
In other words, your lender has the right to take control of your home if you default on your loan.
When you take out a second mortgage, a lien is taken out against the portion of your home that you’ve paid off.
Unlike other types of loans, such as auto loans or student loans, you can use the money from your second mortgage for almost anything.
However Second mortgages also offer interest rates that are much lower than credit cards. This difference makes them an appealing choice for paying off credit card debt.