Second Mortgage

Taking cash out of your home with a second mortgage

A second mortgage can be a good solution if you want to take cash out of your home but don’t want to refinance your primary mortgage. A second mortgage is a long-term loan, with fixed monthly payments and a fixed interest rate, that uses the equity you have in your home as collateral. It is similar in structure to a primary mortgage.

There can be many reasons to take out a second mortgage on your house. For example, you can use it to finance a renovations project of your home, to replace high-interest credit card debt or to obtain the funds needed to make a downpayment on an additional property.

A second mortgage comes with a predictable, fixed monthly payment that will never change for the duration of the loan. It is an ideal option for many, but it is not the only option available. When you call us for a free consultation, we will listen to you and help you decide which financing options could work best for your goals.

Second mortgage features

A second mortgage is a long-term loan that uses the equity you have in your home as collateral.

Some of the characteristics of a second mortgage include:

• Long-term loan contract similar to a primary mortgage. All the borrowed funds are paid to the borrower at the beginning of the contract

• Fixed interest rate, generally a little higher than that of a regular mortgage (a primary mortgage used to purchase a home)—but lower than the interest rates of most credit cards or personal loans

• Fixed monthly payments that do not change over time. If you pay more than the required minimum payments, you will be able to pay off your loan faster but your monthly minimum payments will stay the same

• Can be a good solution for someone looking for a long-term loan, for example to refinance debt or to use as a downpayment on another property, especially when you have a fixed income

The above are to give you an idea of the basics of a second mortgage. If you are thinking about taking cash out of your property, please contact us for a detailed loan scenario for your specific situation, as there may be better options available to you.

Second mortgage vs. Home Equity Line of Credit (HELOC)

Another option for taking cash out of your home is getting a Home Equity Line of Credit (HELOC). A HELOC is similar to a second mortgage in that they are both loans that use the equity in your home as collateral. Key differences include:

• A second mortgage has a fixed interest rate, whereas a HELOC has a variable interest rate

• A second mortgage is a fixed contract one-time loan that you pay off over time, while a HELOC is a revolving credit line

• Second mortgage usually have slightly lower interest rates than HELOCs

• When you pay down a HELOC over time, your minimum monthly payments also decrease (similar to how monthly payments on a credit card decrease with a lower balance); on the other hand, a second mortgage has a fixed monthly payment that doesn’t change. If you pay more than the minimum monthly payment on a second mortgage, you will be able to pay your loan off faster, but your monthly payments will stay the same.

Not sure which one is right for you? Schedule a free consultation!

We can help you find the best loan option for you. We specialize in servicing self-employed borrowers, including artists, business owners and entrepreneurs.

All of our real estate loans include:

• Honest advice, we will listen to your situation and goals and recommend the best mortgage options for you

• In-house pre-qualification without affecting your credit score BEFORE submitting your loan application

• Loans can be done in person or remotely over the phone or Zoom

• Digital document signing

• No rejections, we work with our clients until they qualify

It all starts with a free, no-obligation consultation.

Call 310-294-9417 to schedule your consultation, or self-schedule online now.

“I am a very busy person and Alejandro handled everything for me. I have refinanced two homes and bought two homes using him as the broker. He was a pleasure to deal with.”

—Janice, Artist & Real Estate Investor