Understanding Second Mortgages: Are They Right for You?

 

One of the biggest benefits to purchasing your own home is the ability to build equity in your property. This equity can come in handy down the line for refinancing, renovations, or taking out additional loans - such as a second mortgage.

 

A second mortgage refers to an additional or secondary loan taken out on a property for which you already have a mortgage. Some advantages include the ability to access a large loan sum, better interest rates than a credit card and the ability to use the funds how you see fit. However, keep in mind interest rates are typically higher on a second mortgage versus refinancing and can add additional cash flow tension to your monthly bills. Talk to a mortgage professional today to determine if this is the best option for you!

 

What is a second mortgage?

First things first, a second mortgage refers to an additional or secondary loan taken out on a property for which you already have a mortgage. This is not the same as purchasing a second home or property and taking out a separate mortgage for that. A second mortgage is a very different product from a traditional mortgage as you are using your existing home equity to qualify for the loan and put up in case of default. Similar to a traditional mortgage, a second mortgage will also come with its own interest rate, monthly payments, set terms, closing costs and more.

 

Second mortgages versus refinancing

As both refinancing your existing mortgage and taking out a second mortgage can take advantage of existing home equity, it is a good idea to look at the differences between them.

 

Firstly, a refinance is typically only done when you're at the end of your current mortgage term so as to avoid any penalties with refinancing the mortgage. The purpose of refinancing is often to take advantage of a lower interest rate, change your mortgage terms or, in some cases, borrow against your home equity.

 

When you get a second mortgage, you are able to borrow a lump sum against the equity in your current home and can use that money for whatever purpose you see fit. You can even choose to borrow in installments through a credit line and refinance your second mortgage in the future.

 

Some key things to note when looking at a second mortgage or refinancing:
 

If you have a favorable interest rate on your first mortgage, a second mortgage allows you to keep the lower rate on your primary loan, resulting in a lower blended rate.
Refinancing resets the amortization schedule, which could extend the loan term. A second mortgage leaves the existing term intact, helping you stay on track with your overall financial goals.
Second mortgages often come with more flexible terms, such as interest-only payments, fully open, or shorter term, which can suit your immediate needs.
 

What are the advantages of a second mortgage?

There are several advantages when it comes to taking out a second mortgage, including:
 

Homeowners can access a significant portion of their home equity (typically 80%-85% LTV).

Better interest rate than a credit card as they are a ‘secured’ form of debt.

You can use the money however you see fit without any caveats.

Allows you to access your home equity without breaking your existing mortgage and incurring penalty fees.
 

What are the disadvantages of a second mortgage?

As always, when it comes to taking out an additional loan, there are a few things to consider:
 

Interest rates tend to be higher on a second mortgage than refinancing your mortgage.

Additional financial pressure from carrying a second loan and another set of monthly bills.
 

Before looking into any additional loans, such as a secondary mortgage (or even refinancing), be sure to reach out to me!

 

Regardless of why you are considering a second mortgage, it is a good idea to get a review of your current financial situation and determine if this is the best solution before proceeding.

 

10 Smart Spring-Cleaning Tips to Revitalize Your Home

 

As the days grow longer and the sun shines brighter, it's the perfect time to refresh your home with a thorough Spring clean! A clean, organized space can help you feel more energized and ready to embrace the season ahead.

 

Here are some tips to make your Spring cleaning both efficient and enjoyable:
 

• Create a Playlist: Make cleaning fun by curating a playlist of your favorite upbeat songs. Music not only makes the time fly but can also turn your cleaning routine into an enjoyable activity. Dance while you dust and sing while you sweep—your home will thank you!
   
• Clean One Room at a Time: A clean home doesn’t happen overnight, so avoid feeling overwhelmed by tackling one room at a time. Start small, such as with bathrooms or closets, and work your way up to larger spaces like the kitchen or living room. Alternatively, dedicate one or two rooms per weekend, and by the time May rolls around, your home will sparkle!
   
• Declutter as You Go: Spring cleaning isn’t just about scrubbing and polishing—it’s also the ideal time to declutter. Sort through closets, cupboards, and drawers, and separate items into "keep," "donate," and "discard" piles. Haven’t used that appliance or worn that sweater in over a year? It’s time to let it go. Clearing out the clutter not only makes cleaning easier but also creates a more organized and calming space.
   
• Go Green: Keep your cleaning eco-friendly by opting for natural solutions. Vinegar and baking soda are versatile and effective for a variety of tasks, from cleaning countertops to unclogging drains. A steam cleaner can also be a fantastic tool for deep-cleaning floors, appliances, and even outdoor spaces without the need for harsh chemicals. Choose sustainable products to keep your home fresh and the environment happy.
   
• Work From Top to Bottom: When cleaning, always start high and work your way down. Dust light fixtures, ceiling fans, and shelves first to avoid re-cleaning surfaces below. This method ensures maximum efficiency and minimizes extra work!
   
• Don’t Forget Hidden Spaces: Pay attention to often-overlooked areas like baseboards, window tracks, and behind large furniture. Use a vacuum attachment to get into tight corners, and wipe down walls and doorframes for a truly comprehensive clean.
   
• Freshen Up the Fridge & Freezer: Spring is the perfect time to clean out your fridge and freezer. Empty the contents, toss expired items, and clean the interior surfaces with a mixture of water and mild soap or vinegar. If defrosting is needed, plan ahead to minimize food waste. Restocking a fresh, clean fridge feels fantastic and can even inspire healthier eating habits!
   
• Revitalize Air Quality: Spring allergens can wreak havoc on your sinuses, but replacing your HVAC and furnace filters can help. Upgrade to a higher-quality filter for added protection against allergens, chemicals, and odors. Consider adding an air purifier for an extra boost to your home’s air quality.
   
• Wash Fabrics & Upholstery: Take time to wash or vacuum curtains, upholstery, and throw pillows, as they can harbor dust and allergens. Rotate or clean your mattress, and swap out heavy winter bedding for lighter, seasonal options. Fresh linens make a big difference in creating a rejuvenated space.
   
• Tidy Outdoor Areas: Spring cleaning isn’t limited to the indoors! Sweep porches, patios, and decks, and clean outdoor furniture. If you have a garden, take this opportunity to prepare for planting by clearing debris and cleaning tools. A fresh outdoor space is the perfect complement to your revitalized home.

 

Embrace these tips, and your Spring clean will leave your home feeling fresh, organized, and ready for the new season!