Low rate 2nd mortgage
Why a Second Mortgage Should Be Your First Option
As the current economic landscape continues to strengthen and stocks and financial markets start to gain ground and pick up steam, there is still one area that many individuals have not targeted yet with respect to their personal finances. The financial vehicle known simply as a second mortgage might seem like just another loan. However, when you think about the true value of a second mortgage, it’s purely a wonder why more aren’t being taken out every day.
What is it?
Second mortgages are very simple concepts to understand. When you go to buy a house in the first place, you need to borrow money from a bank, and in exchange you put the home you are about to buy up as collateral. This much is obvious. However, what happens if you still need money down the line?
If you have paid off some of the debt of the original mortgage, then the value of the house minus the current mortgage amount is equity! In other words, you can essentially take out an additional loan from the bank and put the paid off portion of your home back up as collateral so that you can receive a set amount of money now and then pay off the second mortgage just like the first.
What is the advantage?
The advantage of taking out a second home mortgage is actually very strategic. If you have something like high credit card bills, an unexpected payment such as medical bills, or even you need to get all of your finances in order and want to pay off some smaller amounts of revolving debt in order to get one simple payment, then a second mortgage could be the answer.
The reason that a second mortgage is so beneficial is simply because of the process in which it is originally written. When you consider a typical loan then the relationship should make far more sense. If you borrow money on a credit card, then a lender is giving you money and hoping you will pay them back. If you don’t then they are out of luck and have nothing to show for it. At least a mortgage loan has the collateral of a house, but even then there could be risks associated with the condition of the house and of selling it off in order to collect their money. A second mortgage, however, means that a responsible investor and homeowner has already put skin in the game and has paid off a significant portion of their house already. By taking out a second mortgage you are not just a responsible homeowner, but you are also being rewarded for the amount of your house you already put down or paid off.
When it comes to working with 2nd mortgage lenders there is more than enough opportunity to find one that will give you a solid rate. The key to getting ahead with a second mortgage is simply to plan for how you will use the money to better yourself and your financial position, but also to borrow strategically and at the best interest rate possible.