Question:

When to consider taking out a second mortgage?

Answer:

Taking out a second mortgage comes handy for different purposes. Perhaps the best one is to consolidate debt - secured and non-secured - with a home equity loan, as the second mortgage. Many borrowers also use a 2nd mortgage to supplement a down payment.

Another reason is to simply get some free cash to spend on a new car or exotic vacation. It is not advisable to tap your equity like this, but many people are still doing it.

Some people take a second mortgage to pay a large medical bill, fund college tuition of a family member, or for home rehab purposes.

There is a great variety of second mortgage loans on the market - prime and subprime, home rehab loans, fixed or variable rate, etc. Also, HELOCs and HELOANs are quite successfully used for tapping home equity, too.

Simple interest loans (SIMs) are also offered as second mortgage loans - debt increases so slower with a SIM.

Since obtaining a second mortgage may involve larger closing costs than a first mortgage, many borrowers would prefer to roll the costs into the loan or use a no cost 2nd mortgage.

Mortgage rates hit their lowest since 1955. Ask the home loan experts we recommend Quicken Loans how to take advantage of them.
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