What to Know About Getting A Second Mortgage

by Kim Blaylock 09/29/2019

A second mortgage is a loan that enables you to take funds against the value of your property's equity above your primary mortgage. An asset like a home has every tendency to gain value over time. Second mortgages are an excellent means of using your property for other projects without selling it outright.

What is a second mortgage?

A second mortgage is a loan type that is similar to the one you might have used to buy your home. It is a loan that uses your home as collateral. The credit is referred to as a second mortgage because your first loan is the one that is covered by a lien on your property. The second mortgage takes advantage of the market value of your home compared with any loan balances. Ideally, equity increases over time and can change in different ways.

A second mortgage can come in diverse forms such as:

Lump sum: A standard second mortgage can be given to you once, and it provides you with a considerable amount to use for whatever you want. The repayment is gradual, spanning over a specific period. You will be required to pay a fixed amount of money monthly. Each payment contains a part of your loan balance as well as a portion of your interest cost just like your primary mortgage. 

Line of credit: You can also borrow using a line of credit or a large amount of money from which you may draw. You don't need to take any money when you go for this type of loan—but the option to do so is available if you want.

Rate choices: Depending on the type of loan you prefer, there may be a fixed rate attached to your loan that will assist you in planning your payments. Variable-rate mortgages are very common for this line of credit.

Advantages of a second mortgage include the following:

Interest rates: One of the benefits of going for a second mortgage is the lower interest rate when compared with other types of debt. Also, your lender's risk is minimal because you are securing the loan with your property's equity.

Tax Benefits: Interest paid on the second mortgage attracts some deductions in most cases. Check with the person preparing your tax return before taking deductions.

Large amount: With a second mortgage, you can borrow a significant amount of money to help you with your financial needs. The main reason for this is that your home secures the loan and its value is usually high.

Before taking a second mortgage or line of credit consider if you plan to sell your home soon. Confer with your financial planner to make sure your new loan is in your best financial interest.

About the Author
Author

Kim Blaylock

Your Hometown Realtor!

Real estate became a passion of mine from an early age. Many hours were spent in my parent’s backseat traveling to open houses and checking out new areas on the weekends. When my family relocated from Wichita, Kansas to Orlando in 1978, those house-hunting trips continued long after they bought a home here. After I graduated from the University of Central Florida (Go Knights!) with a Bachelor’s degree in Marketing, I obtained my real estate license. I worked in product marketing for a few years but wanted to get out from behind a desk. Eventually I obtained my broker’s license, and for a few years I also held a mortgage broker’s license. 26+ years later I still enjoy the thrill of finding that perfect home for my buyers, or helping sellers prepare their home for an upcoming sale. It never gets old!
 

When I’m not out selling homes, I love settling down with a good book, visiting the Disney parks, museums, galleries, watching movies, or just relaxing with my husband of 24+ years and our two adult children. Traveling is another favorite activity and I’ve been blessed to visit many other countries and parts of the U.S. over the years. I'm an active volunteer in my church. community and my local Pi Beta Phi sorority alumnae club as well.   

Over the last 18+ years I’ve worked with a dynamic sales team that is comprised of myself and two of my best friends. We provide each other with sales support, advice, and encouragement. This is a huge benefit for my customers because it ensures you always have an agent ready and willing to help. You will never be left to handle a challenge by yourself because I’m never too busy to help you, your friends or family members. 

My Personal Mission: I pledge to be in consistent communication with my customers, keeping them fully informed throughout the entire buying or selling process. I believe that if you’re not left with an exceptional experience, I haven’t done my job. I don’t measure my personal success through achievements or awards, but through the satisfaction of my clients.

Let me put my professional negotiation skills and industry knowledge to work for you! Call or text me today at 407-497-9321 so we can get started!