Money is essential for everyone and all of us need that every time. For that you require an alternative or second mortgage. It helps you to invest your money in different developmental goals and also Home Equity Lines of Credit (HELCOs). Let’s talk in detail.
Before moving ahead, we first need to know why it is called a second mortgage. It’s because you have already been enjoying one mortgage like a loan for your property. This kind of mortgage comes later as you give more importance to the first one and also provide fund to this mortgage after you reach the goal of first mortgage.
Second mortgage is required only when you are seeking more money, but is not a good decision as you find risk is there along with. You can find people run for second mortgage when they have limited credit and it’s troublesome to get the desire amount of cash inflow. For example when you see that the price of your house has increased and you have already been paid a part of your home loan then only you will search for a large amount of money where the house acts as collateral.
It has been found that many people look for the second mortgage for their own purpose, but they never thought that they are dealing with a huge source of money which they are getting against their home. You need to remember that you can seek for second mortgage only when you badly need money.
Now you should have to understand the uses of second mortgage, which are as follows
1. To purchase more houses.
2. To make a Home Equity Line Of Credit (HELCO).
3. For the development of the house.
4. To keep safe distance from the Private Mortgage Insurance (PMI).
After knowing the second mortgage and its uses, it’s time to understand the troubles you can face due to it, which are as follows:
1. The main disadvantage of this kind of mortgage is the risk factor. It‘s very risky when you are repaying you first loan and have kept your home as collateral to the second lender. If you are not able to repay the loan, the lender will forcefully drive you out from your home and foreclose the property. So, it’s better not to go for the second mortgage unless it’s not needed.
2. It has also found that the second mortgage always comes with a little higher rate than the first one. This happens because you can only get it after the full repay of first mortgage. This is riskier as it charges more than any simple vanilla mortgage.
3. Last and most importantly you require paying of a huge second mortgage amount which totally depends on the amount you have taken as second mortgage and for how many years.
Now the question is, from where you can get the second mortgage? The answer is very simple as you can get it nearly from every lender, like the banks with which you are working or the previous lender who issued you the first one. The lenders become so happy when you ask for it as this is a big opportunity for them to increase their business. Not only the bank or primary lender, you can also get it from different online lenders and mortgage dealers. But it’s always good to compare the rates and take the mortgage that charges minimum.