Getting a second mortgage is a big decision to make. Coming to the conclusion that you are in need of a second mortgage is not something that you just decide overnight. When people decide that they need a second mortgage they are likely in some type of financial trouble that requires a sum of money to help. The steps to getting a second mortgage can be more difficult than it was when getting the initial mortgage. This is because the risk is much higher for the lender. Finding the best rate for your second mortgage is essential and with the help of OE Mortgage, it can be obtained.
What is a Second Mortgage?
A second mortgage is not quite like an initial mortgage. A second mortgage is based on the equity in the home. A lender will decide how much equity you have in your home based on how much you have paid into your mortgage and how much the home is valued at. A second mortgage can come in two different forms. The lump sum form is called a home equity loan and depending on what your home is worth and how much you have paid into that amount, you will receive it all at once. The other type of second mortgage works much like a credit card and is called a home equity line of credit. You will receive a credit card that can be used for anything and you will pay for it monthly like a credit card payment.
Getting a Second Mortgage
Getting a second mortgage is more difficult as it is riskier. The way the lender views it is that if you default on your mortgage, the first to be paid will be the initial mortgage and the lender of the second mortgage could not even see any of the money they are owed. The rates for a second mortgage can be higher, however they are still much lower than an unsecured credit card or other type of loan. The best place to look first is with the mortgage lender that you have your first mortgage. They are the most likely avenue to obtaining a second mortgage. They are already aware of your situation and can help you decide whether a second mortgage is the right choice to make. They are more likely to work with you because they have already been doing business with you.
Whether you find yourself in a financial bind due to a life changing event or if you need to pay for your child’s college education, a second mortgage can be a good choice. Even though the interest may be higher, the rates are still much lower than obtaining help with financing in another way. Contacting a broker can help you decide what step is best for your financial situation and what will help you get out of debt. Because you will have to pay a whole other payment, you should seriously consider this option before making any final decisions.