Things to consider when taking a second mortgage:
Matrix Mortgage Global – Things to consider when taking a second mortgage:
A second mortgage is a loan that you can take out using the equity in your home as collateral. How much equity you have in your home is determined by how much money you have paid down on the principal of your mortgage, plus or minus any increases or decreases on the property value of your home.
There are many factors that come into play when making the decision to take out a second mortgage on your home. Before you decide here are a few questions to help you determine if a second mortgage is the right choice for you in your current situation.
Can I afford it?
The most important question you should ask yourself is, can you afford to make the payments on a second mortgage? The first mortgage doesn’t go away and you will now be responsible for making both payments. You don’t want to bite off more than you can you chew and risk getting into a situation that compromises your credit score if you become unable to continue making payments.
What do I need it for?
A second mortgage can really be used for anything. Many people take one out for their child’s tuition, or to make upgrades or renovate their property, install a pool or otherwise improve the aesthetic of their home. Other people will use it for debt consolidation, or to make necessary repairs like replacing the roof. Some of these situations are more dire than others and you really want to make sure that taking on this extra debt will be worth it for you in the long run.
How long will it take me to repay it?
Unlike your first mortgage which is paid off most often over many years, a second mortgage will have a higher interest rate and a shorter term. The term is agreed upon by you and your lender but you want to make sure that you are able to make the payments for the duration.
Are you planning to sell soon?
A second mortgage will reduce the equity of your home, if you are considering a move in the near future it may not be in your best interest to add that extra interest onto your mortgage. In the end, you could be losing out on potential profits to pay off interest.
If you are considering a second mortgage or would like to explore this option further, call us today to speak with one of our mortgage specialists.
At Matrix Mortgage Global, we can help you get started on this path. Call us today at 1-877-371-5293.