All You Need to Know About Second Mortgage
Second mortgage loan is a type of loan that is taken out against your property with the first mortgage loan already being there. Many people take out second mortgage loan to manage their huge expenses such as purchasing a vehicle, managing the college education fee of your child, etc. Second mortgage loan helps you consolidate your unsecured debts so that you may be able to pay them off soon.
HEL and HELOC – What you need to know about it
Here are discussed what you need to know about HEL and HELOC
Home equity loan (HEL) – While talking about home equity loan (HEL), you need to know that this is a fixed loan where the lender provides you a fixed amount of money that you’ll have to pay off within a specific time period. An advantage of HEL is that you can build equity in your home every month as you continue making the payments to repay the loan. Some banks may give you home equity loan easily if your loan amount is not too much and if you have a good credit score. You may take out this loan for a period of 30 years which, in turn, will give you sufficient time to pay down your loan. The interest rate for this type of loan is relatively low.
Home equity line of credit (HELOC) – This is another type of second mortgage against your property. In this type of loan, you can withdraw as much money as you want within your credit limit and you may pay only the interest for some months on the amount that you’ve withdrawn. This type of loan is beneficial when the interest rate is low but very much unavoidable when the interest rate is high. Mostly, the banks do not charge any money from you every time you draw money from HELOC.
Second mortgage – Its advantages
Some of the advantages of second mortgage are stated below.
Flexibility of using money - Second mortgage loan can be taken out with the flexibility to use it for any purpose.
Loan taken out against your house - This loan is considered safe by the lenders because this loan is taken out against your house. So, in case you make any default on your loan payments, the banks will get your house in return against the loan. As such, it is easier to take out a second mortgage loan.
Second mortgage loans are essential for the individuals who require money. You need to have a good credit score if you are thinking to take out a second mortgage loan. This is important because you will then be able to take out the loan at an affordable interest rate. It is advisable that you do proper research before you may decide to take out a second mortgage loan.