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2nd Mortgage - Better Than Refinancing
You have probably received refinancing offers in the mail or advertised online touting your ability to pull out your home's equity. But a 2nd mortgage, also called an equity loan, may be a better financing option than refinancing your mortgage. 2nd mortgages are ideal when you just want to tap into your equity, plan to move soon, or are unsure about the amount you want to borrow.
Tapping Your Equity
Tapping into your home's equity is best done through a 2nd mortgage if you already have a low interest loan. Typically, applying for a 2nd mortgage requires fewer fees than refinancing a mortgage. 2nd mortgages are also paid back sooner, so your interest payments are less.
With the costs involved in refinancing, you typically need to keep the loan for about two years to break even. However, with a 2nd mortgage you don't have those fees to worry about recovering. 2nd mortgages do have minimum balance and early pay off fees, but they are significantly less than refinancing fees.
Flexible Loan Amount
A 2nd mortgage allows you to take out your home's equity over the course of several years. The money can be accessed with a check, ATM card, or direct deposit, depending on how you set up your account with the lender. Additionally, you only pay interest on the money that you have withdrawn.
Lenders tend to be more lenient with approving 2nd mortgages. Since the amount usually is less than a traditional loan, lenders remain confident that they will receive payment. If you have had a few credit glitches in the past two years, think about going with a 2nd mortgage.
2nd Mortgage Mistakes
2nd mortgages aren't for everyone. You should weigh the cost of PMI and payments when choosing your financing options. Borrowing more than 80% of your home's value will subject you to private mortgage insurance.
Your monthly payments should also be a factor in your decision. By taking out equity when refinancing your home, you will have a lower payment than if you had both a mortgage and 2nd mortgage payment. Also, if you refinance in the future, you will have to pay off your 2nd mortgage.
To view our recommended sources for 2nd mortgage loans online, visit this page: Recommended Mortgage Lenders Online.
Carrie Reeder is the owner ABC Loan Guide, an informational website about various types of loans.
MORE RESOURCES updated Mon. March / 08 / 2021
Today's mortgage refinance rates — 30-year rates sit at the lowest seen in 13 days | March 5, 2021 - Fox Business
Today’s mortgage refinance rates mixed — one key rate drops while another rises | March 2, 2021 - Fox Business
Today’s mortgage refinance rates mixed — one key rate drops while another rises | March 2, 2021 Fox Business
Today's mortgage and refinance rates: March 7, 2021 | Rates go down Business Insider
Can refinancing a mortgage hurt my credit score? Fox Business
Best mortgage refinance lenders in 2021 Bankrate.com
Best cash-out refinance lenders in 2021 Bankrate.com
Mortgage rates are falling to unprecedented lows in 2021 — refinance now to save money - Q13 FOX (Seattle)
Mortgage rates are falling to unprecedented lows in 2021 — refinance now to save money Q13 FOX (Seattle)
How to refinance an FHA loan | Mortgage Chase News & Stories
Mortgage Recast: How to Reamortize and Save Money Credible News
Can Closing Costs Change On The Closing Disclosure? The Mortgage Reports
2021 Maine first-time homebuyer assistance programs Bankrate.com
David Hochberg: Can homeowners refinance after forbearance? WGN Radio - Chicago
3 signs you should refinance your mortgage right now Fox Business
The Lending Issue: Ready, Set, Close! Chicago Agent magazine
How do I get the most out of my mortgage refinance? Fox Business
Top 5 mortgage refinance questions answered Fox Business
How to decide if you should refinance your mortgage Fox Business
Pros and cons of a cash-out mortgage refinance Fox Business
How to refinance your mortgage Fox Business
Mortgage refinance: Everything you need to know Fox Business
Mortgage refinance rates continue hitting record lows – here’s how to get the best deal now - Fox Business
Mortgage refinance rates continue hitting record lows – here’s how to get the best deal now Fox Business
What are the hidden costs of refinancing a mortgage? Fox Business
Who's exempt from the new mortgage refinance fee? Fox Business
Everything You Should Know About The New Mortgage Refinancing Fee That Goes Into Effect Dec. 1 - Forbes
Everything You Should Know About The New Mortgage Refinancing Fee That Goes Into Effect Dec. 1 Forbes
How to refinance your mortgage in 5 easy steps Fox Business
Mortgage refinance applications soar despite a new fee that increases the cost - Pittsburgh Post-Gazette
Mortgage refinance applications soar despite a new fee that increases the cost Pittsburgh Post-Gazette
Refinancing your mortgage? Don’t make this mistake Fox Business
4 ways to get lower mortgage refinance rates Fox Business
Despite low mortgage interest rates, homeowners should research the caveats before reﬁnancing - Seattle Times
Despite low mortgage interest rates, homeowners should research the caveats before reﬁnancing Seattle Times
The best mortgage refinance lenders of March 2021 Business Insider
A record 19.4 million homeowners can now save big on a mortgage refinance, as rates hit another new low - CNBC
A record 19.4 million homeowners can now save big on a mortgage refinance, as rates hit another new low CNBC
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How to Refinance Your Home | Home Lending Chase News & Stories
10 things to know before refinancing your mortgage Fox Business
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Complete Checklist of Mortgage Refinancing Requirements Credible News
10 tips for getting the best mortgage refinance rate, from checking your credit report to choosing the right lender - Business Insider
10 tips for getting the best mortgage refinance rate, from checking your credit report to choosing the right lender Business Insider
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USDA Construction Loans | Buy Land & Build A Home With USDA The Mortgage Reports
How to get a low-cost mortgage refinance Bankrate.com