Dare to think beyond the first?
You may be in need of cash but do not have much savings, neither would you lay your hands upon retirement money. So, what do you do - borrow against your home? Well, it is a possible option. But what if you already have a mortgage on your home - I mean you’ve bought the home with a mortgage and you’re still paying for it. Would you go for a second mortgage then?
Well, it’s a good option to think beyond the first and get a second mortgage but have you thought of the cons of borrowing again? If you haven’t, then here are some of the aspects you would like to consider before you decide on the second.
Once you take out a second mortgage, you can no longer go for a third mortgage, though that’s not something many people would like to do. But who knows when you need money and when some emergency may crop up. And then, you may have no other option but to take a mortgage, may be not against your primary home but your second home if required.
What comes next to my mind is the interest rate on the second mortgage. No matter how good your credit is or how well you can manage your finances, rates will be higher than that of a first mortgage. It’s just that lenders would consider the second mortgage as a risky proposition because you already have a first mortgage on the same property, hence the higher rate.
Moreover, a second mortgage means higher debt, more interest due and so in total it takes more time to get your home free of any debt because there are two loans instead of one. Imagine how it feels having a second wife along with the first 
“It’s a huge burden…” - this is what I’ve heard most men saying. So, if you have good income and feel comfortable with another loan, only then think of going for a second mortgage. It’s not impossible managing two loans but just that you need to move on with a well-prepared budget because there are other accounts where you may want to invest your money.
One more aspect that you need to think of is payment increase due to rate adjustments. This is quite common in case of home equity line of credit, which is fixed to the Prime Rate. Also, the lines of credit charge additional fees such as early closure fee and minimum draw amounts, which may go beyond what you require. So, get prepared for such things to happen and off course do not forget to read the fine print carefully when you take out a second mortgage.
If you wish to know about second mortgages, refer here.
second mortgage, second mortgage cons, home equity line of credit
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