The Benefits Of A 2nd Mortgage

The Benefits of a 2nd MortgageBLOWNMORTGAGE.COM

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A 2nd mortgage, otherwise known as a home equity loanor line of credit, provides definite advantages forhomeowners that have equity in their home or for thosethat are looking to purchase a home and need morethan 80 percent financing. A few of the benefits that thatcan be realized with a home equity line of credit or fixedrate mortgage include the ability to eliminate PMI, paydown credit card debt and the chance to makerenovations on your home without needing a largeamount of liquid assets. A second mortgage might haveshorter terms and higher interest rates, but they are agreat way to accomplish financial goals as well as fix upyour house as needed or desired.



Eliminate PMI with a 2nd MortgagePrivate mortgage insurance can add a significant amount toyour mortgage payment every month. If you are thinking ofpurchasing a home in which you have less than 20 percent toput down on, talk to your lender about your eligibility for a2nd mortgage. The financing that comes from the homeequity loan can help you to avoid paying PMI. The firstmortgage that you obtain will typically provide 80 percent ofthe sales price and the second loan is used for the remainderof the loan that you need, after your down payment. This typeof loan is often called a piggyback loan and has helped manypeople get into the home that they wish to purchase.



Pay Down Debt with a HELOCIf you have a large amount of debt to pay in addition toyour mortgage, it can get overwhelming. When you haveequity in your home, it is sometimes possible to tap into itto use the money to pay down other debt. By consolidatingall of your loans into one payment you can pay the balancedown faster, eliminate paying interest to many differentcompanies and make one simple payment every month. Afew examples of the types of debt that can be paid off witha 2nd mortgage include credit cards, student loans, autoloans and tax debts.



Make Improvements on your HomeLarge improvements on your home can be costly. If youhave equity in your home, you can use some of it to makethese improvements. Many people take out a home equityline of credit and draw the money out of the account as theymake the changes in their home. Depending on the amountof equity that you have in your home, you could make somesignificant changes which have the added benefit of addingvalue to your home, allowing you to gain the equity backthat you had in it before taking out the 2nd mortgage ratherquickly.



Prevent the Need to RefinanceWhen you need to take cash out of the equity of your home,yet you do not want to touch your first mortgage becauseyou have a good rate or you have paid into it for severalyears already and do not want to start over, a 2nd mortgageis advantageous. This loan allows you to get the money thatyou need without making you start over from scratchpaying down the principal balance of your first mortgage.Most borrowers will have the option to obtain a fixed rate2nd mortgage which gives them the cash all in one lumpsum or a home equity line of credit, which works like acredit card, allowing you to draw the funds that you need asyou need them.



The 2nd mortgage offers many advantages that no otherloan could provide. If you are considering makingimprovements to your home or consolidating debt, thehome equity loan could provide additional benefits foryou around tax time, making it the best choice for you.Talk to your lender about the ability for you to have a 2ndmortgage and start enjoying its benefits today!



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Justin McHood is Americas MortgageCommentator and has been providingMortgage commentary for over 10 years.

INFORMATION PROVIDED BY: JUSTIN MCHOOD

MORTGAGE COMMENTATOR

Information Originally Published: February 2, 2015 BLOWNMORTGAGE.COM LENDER HOTLINE: 888-581-5008

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The Benefits Of A 2nd Mortgage

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