Should I Get a Second Mortgage?
By Miriam Caldwell. Money in Your 20s Expert
Miriam Caldwell is a freelance writer with a specialty in personal finance. She believes that you can lay a solid foundation by starting to manage your finances in your twenties.
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A second mortgage is similar to a first mortgage. It is a loan that is secured by your home. It is for a set amount and you will receive a one time payment for the amount of the loan. Then the payments are for a set amount each month for the set term of the loan. The interest rates on second mortgages tend to be a little bit higher because the second mortgage will receive money only after the first mortgage is paid off.
Many people will consolidate their debt and then find themselves in a large amount of credit card debt again in a short amount of time. This is because they do not address the problems that caused them to go into debt
in the first place. It also puts your home at risk because you are moving unsecured debt to your home. If you cannot make your payments you can lose your home. With the changing values of homes, you may end up underwater on your mortgage. if you take out additional loans against your home.
It is bet if you can save up a down payment for your home instead of taking out a second mortgage. This will put you in a better financial position and make it easier to sell your home. It can also prevent you from becoming underwater on your mortgage. It is also important to avoid cashing out the equity in your home. You can use the equity when you retire or when you sell the home and move up to a new one. A second mortgage should be one of your final options when you are looking for additional money. If you have a second mortgage, you should make paying it off a priority.Source: moneyfor20s.about.com