Advantages & disadvantages of a second mortgage

by Jackie Davis 10/27/2024

Major pros & cons of a second mortgage featured image

A second mortgage grants homeowners the ability to borrow equity from their home to gain financing. These funds can be used to pay bills, enhance the property and more.

The second mortgage is connected to the equity your current mortgage has built up, so it’s crucial to understand the ins and outs of a second mortgage before deciding to use it.

Advantages & disadvantages of a second mortgage

Advantages

Lower interest rates in comparison to standard lines of credit.
More financial wiggle room to invest in larger home renovations.
You can use your homes’ equity without having to refinance the original mortgage.

Disadvantages

Your mortgage lender may require a high credit score and debt-to-income ratio to qualify.
Your home may be at risk if the home equity line isn’t paid back within contract guidelines.
If you decide to sell your home, you may make less profit.

How do I get a second mortgage & what should I expect?

To take out a second mortgage loan, most lenders require a decent amount of equity to be built up on your home which is the amount you’ve paid towards the principal balance (the cost of the home plus interest).

After taking out the second line, you’ll need to have at least 20 percent equity still built up on your home. If you need this money fast, please note, it takes a few weeks for lender approval and the loan comes with fees.

If you’re unsure a second mortgage is for you, speak with your lender to explore your options and make adjustments as needed.

Second Mortgage

Interest Rates

About the Author

Jackie Davis

Welcome to Jackie Davis and Company. If you have navigated this far, we thank you and would like to share how we differ from other teams and agents. We work tirelessly and are committed to providing 100% customer satisfaction. We recognize, listen, value, and appreciate your goals as you move towards listing or selling your home. As Listing Agents we continuously integrate new and advanced technology to promote your biggest asset. Our strong negotiation skills are invaluable for getting you the best price for your home. As the Buyer's Agent we pride ourselves on being fully educated in our local markets. While focusing on integrity and honesty we will provide you with the highest level of professionalism and analysis. We are proud that this hard work has earned us recognition as top 1% both company and state wide in the industry. Achievements * 1st Quarter 2017 Leading Sales in Fairfield * 2017 February Leading Sales Team * 2017 March Leading Sales Team * Chairman's Elite representing the Top 1% Agent at William Raveis Nationwide & Fairfield County * Over $45 million Listed & Sold in 2016 * Over $30 million Listed & Sold in 2015 * 99% List to Sales Ratio (higher than market average) * 75 Average Days on Market (less than market average) * Jackie Davis Promoted to Sales Vice President 2016 * Raveis Award of Excellence every year * Exceptional Customer Service Award every year * Top Units Sold Team October 2016 * Top Customer Service October 2016 * Top Mortgage Support September 2016 * Top Selling Team January 2016 * Top Mortgage Support August 2015 * Top Selling Team Feb 2014 * Top Producing Team Jan 2014 * Top Selling Team Dec 2013 * Top Selling Team Nov 2013 * Top Producing Team Nov 2013 Professional Specialty Innovative Marketing and Technology equals proven sales. Our team of licensed professionals is ready to serve. We handle: Sellers & Buyers Exceptional Properties Investors Waterfront & Beach Area Homes Country & Equestrian Properties New Construction & Land Relocation Professional Association National Association of Realtors Connecticut Association of Realtors Greater Fairfield Board of Realtors Consolidated Multiple Listing Service Community Involvement PTA committee member for past 14 years from elementary through high school PTA Board Member for 4 years Shoff Darby Advisory Scholarship Board member past 5 years Committee member for Cancer Care of Norwalk past 10 years Volunteer Habitat for Humanity Operation Hope coordinator for elementary and middle schools, last 3 years Volunteer for a variety of town sports teams, that my daughters participate in The County Assemblies Board Member The b-Cause Foundation Board Member- a non-profit organization whose mission is to educate children to recognize neighbors in need in our local community. Wakeman Boys & Girls Club- Fundraising Committee Member Committee Member for Cancer Couch Fundraiser the Cancer Beat 2016 Near and Far Aid Volunteer Education BA from Merrimack College Personal Fairfield resident for 39 years Currently reside in Fairfield Beach Area Married 27 years Four daughters currently in & have graduated Fairfield Public School system Areas Covered Fairfield Southport Westport Weston Norwalk Trumbull Easton Stratford Shelton Milford Stamford Bridgeport