Top reasons Why You Should Get A Second Mortgage in 2021
Matrix Mortgage Global is a team of committed and experienced mortgage brokers, who want to help you and your family to take care of your financial responsibilities and achieve your dreams in 2021. Those dreams may need the help of a Second Mortgage.
What is a Second Mortgage?
A second mortgage is a mortgage that is given to a borrower who already has a primary mortgage. You can also borrow against whatever home equity you have. Second mortgages often close in just a few weeks, where regular loans can take around a month.
Keep in mind, a second mortgage is still a loan, and you will need to pay the funds back. Second mortgages are tied to your home, so if you can’t pay back the loan, you can lose your house. Remember a second mortgage takes a lien on your home. It is sometimes called a piggyback mortgage.
They can also be called Junior liens, which are secured in the loan with a home. Second mortgages can be created as standalone second mortgages or as piggyback mortgages.
A second mortgage should not be confused with a second charge mortgage, a secured loan, or a remortgage. They are different from refinancing mortgages. With a second mortgage, a new mortgage is created and its payment is added to your monthly payments. You will need to pay both your primary and second mortgage payments. You take a loan against your home’s equity. Refinancing allows you access to equity but doesn’t add a second payment, and also makes you may more at the closing of the loan.
Reasons to get a Second Mortgage in 2021
Get out of Debt!
A second mortgage can be used to pay off debts and other loans or make a large, much-needed, personal purchase. Debts such as credit cards, medical bills, and student loans are just a few examples of debts that can be paid off with a second mortgage. Renovations are a common reason to get a second mortgage. Because renovations can sometimes cause surprise costs, a second mortgage can get you the funds you need.
Second Mortgages usually have lower interest rates than credit cards and other personal loans so it will be easier for you to pay off.
When you need funds quickly, regular loans may take months to be approved. A lengthy wait time doesn’t help when you need the money right away. Second mortgages usually get a response anywhere from days to weeks after applying. The criteria for Second Mortgages are a little different and easier than regular loans.
A second mortgage has lower interest rates than credit cards, banks and unsecured lenders. Since the interest rate is low, it’s easier to pay off. The rates are low because your home is being used at collateral. Rates depend on location, condition of home, and loan to value.
Don’t Have to Know the Amount!
If you don’t know the exact amount of money you need to borrow, a Second Mortgage could help. One type of Second Mortgage allows you to borrow as much or as little funds as you need, and then you can pay it back. If you need more, then you can withdraw more, and then pay it back.
Use the Funds for Whatever You Want!
When you own a home, you can use your home equity to pay for expenses you wouldn’t normally be able to afford. A few examples would be medical expenses, tuition, sudden home improvements, and renovations, or even a new vehicle.
When you get a second mortgage, one way it can be given to you in a lump sum. You can then use it for whatever you need to. Second mortgages can help pay off financial responsibilities as well.
How do you get a Second Mortgage?
As a borrower, you will need to show proof of income to show you can afford payments. Lenders need to know you have a steady source of income so you will make the payments. Having a high credit score will help you too, as it will keep your interest rates low. Home equity will also help you qualify for a second mortgage. If you bring proof of making regular utility payments, it will also help you more easily qualify for a second mortgage.
Overview of what you will need:
- Equity: Borrowers will have to provide proof of their equity, the more equity the better to qualify.
- Property/home: Home must be worth the amount the borrower claims.
- Source of income: Have some pay stubs to show evidence of a steady income.
Why use a Mortgage Broker when you get a Second Mortgage?
Mortgage brokers have many benefits. They can save you energy, time, and money. Brokers are mortgage experts and know how to sort through trust companies, insurance companies, lenders, banks, and private funding options to find one to fit your needs. They have more access to better rates and a variety of loans than banks or other lenders.
Mortgage brokers are even able to help those with bad or poor credit. They know where to look to find funding for your situation. Because brokers tend to be smaller than banks, they can offer you more personal service, while being more flexible and giving more options. Let Matrix Mortgage Global’s compassionate and trained team help you get the right mortgage for you, and answer all your questions along the way.
With Mortgage brokers, you just need to do one application and then the broker will take over. They will do the research and negotiating for you.
Is There a Good Time to Get a Second Mortgage?
If you feel that a second mortgage is a way to help you in your financial situation, you simply make sure you have home equity. You need to be able to make payments as well. Lenders will want to know how much equity you have in your home and how much debt you are carrying.
Benefits of a Second Mortgage
If you have equity and can make payments, a second mortgage will work fine for you. You can look forward to lower interest rates, higher loan amounts, and tax benefits.
Interest rates: Second mortgages secure your loan because it is tied with your house. This poses less risk to your mortgage lender, so second mortgages usually have lower interest rates than other types of loans.
Tax benefits: You may be able to get an interest deduction on your second mortgage if you use the money for home renovations and improvements. This can be found under the Tax Cuts and Jobs Act.
Loan amount: Because of the nature of this type of loan, and using your home as collateral, you can borrow larger amounts. You may be able to borrow up to 85% of your home’s value.
Matrix Mortgage Global is here to help find the right mortgage for you, whether it’s your first mortgage or second mortgage. With the number of mortgage options available today, we will be able to find one for you. As with any mortgage question, let us give you an answer, guide you to successfully achieving your financial dreams today.