Second Mortgage Rates: A Second Look

2007-03-08 10:33:40

( Financial )



There are several ways to borrow money against your home or any of your properties. This may be convenient in some cases as loans provide you with the flexibility and convenience of having cash when you need it. However, if credit lines or loans are misused or abused, you may also end up losing your home.

Home equity lines of credit allow you to borrow relatively big amounts with low interest rates. You are able to take out different amounts at different times just by writing checks. Home equity lines of credit is convenient and flexible. Equity lines of credit require you to put your home up as collateral. This means you risk losing your home if you make a late payment or you are unable to meet your monthly amortizations.

Another way to secure a loan against your home is to get a second mortgage. Taking out a second mortgage against your home will allow you to procure immediate cash. Second mortgage rates are fixed and so are the monthly payments. Compared to lines of credit, you would not be surprised with the interest or the amount you have to pay once you take out your second mortgage.

The entire length of a second mortgage may vary from one lending institution to another. Most banks offer terms up to twenty years with very low second mortgage rates. Some banks require you to pay off the entire amount of the loan in a single year. Second mortgage rates are often fixed for the entire length of the loan. However, there are some cases where your lending institution can increase your rates. Before taking out a second mortgage, make sure you understand the payment terms and the circumstances when your bank can increase your rates.

If you are still uncomfortable with second mortgage rates, you may also want to explore other options such as unsecured loans or loans against your credit cards.


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