When is it a Good Time to Take a Second Mortgage Out on My Home?

While everything may not be going your way right now, there is one aspect of your financial life that is in great shape. That’s the equity you have in your home. No matter what else is happening, you’ve manage to make your mortgage payments on time and built a reasonable amount of equity. Now you are wondering if taking out a second mortgage would better your situation in some way. Here are a few of the reasons why people apply for second mortgages when they have a real need.

When You Want to Consolidate Debt

You are carrying a fair amount of unsecured debt and it’s getting harder to manage. With some new medical bills on the horizon, it would be nice to reorganize your debt so you can remain current on everything. Now is the right time to consider taking out a second mortgage and paying off all of those other debts.

This approach allows you to use the equity in your home to restructure your existing debt. It’s not unusual for homeowners to find out the interest rate on their second mortgages is much less than they are paying on credit card and other forms of debt. The amount of the mortgage payment is often less than the cumulative total of all those individual debts.

Thanks to these factors, you accomplish more than simply restructuring your debt. It’s now possible to set aside a little each month and make an extra payment now and then. Assuming you don’t run those credit card balances up again, the second mortgage will allow you to be free of that debt sooner rather than later.

When You Want to Add On to the Home

A growing family means you need more space. Even after you finish the basement or attic and convert it into living space, you need more. That’s when a second mortgage in Barrie will come in handy.

The second mortgage allows you to add another room or two while still keeping the payments manageable. Once the work is done, those additional rooms will also add to the market value of the home. While that may not seem like an important factor right now, it will become a major plus when you decide to sell the property after reaching retirement age.

When You Want to Update Existing Home Elements

Perhaps you have plenty of square footage, but there are some updates that would make the home more comfortable. It may be time to install a new heating and cooling system. Maybe it would be great to get rid of the old windows and install new windows that are more energy efficient. The only problem is that your current credit score could make it difficult to receive a line of credit or some type of home improvement loan.

A second mortgage is your answer. Assuming you have enough equity in the home, there are lenders who are willing to extend a mortgage even if your credit rating is not the best. You can use the funds to make all the home improvements you want. By making timely mortgage payments, you also receive more positive comments on your credit reports. Over time, those comments will help raise your scores.

When You Need Money to Launch Your Own Business

You have a great idea for starting your own business. Unfortunately, not everyone shares your vision. Part of the problem is that while your work experience does include managerial work, many lenders question your ability to run a business. Couple that with a credit score that lenders consider marginal and it may be hard to find investors or even a bank that will provide the money needed to launch your enterprise.

The solution is a poor credit mortgage in Barrie. It is somewhat risky to pledge your own assets to launch the business, but it may be the fastest way to get things up and running. Make sure you can manage the payments on the second mortgage while your company is reaching for profitability. In the best-case scenario, the net income from your effort will be covering that payment by the end of the first year.

When Your Kids Want to Go to College

Your kids have scholarships and other financial aid that covers most of the cost of attending a university. There are still a few expenses that need to be covered. You could secure a second mortgage and deposit the funds in an interest bearing account. When and as college expenses need attention, withdraw enough to meet them. In the interim, allow the balance to earn at least a modest amount of interest. With proper management, the money will last long enough for your child to finish with college and start his or her career.

When You Want to Finance the Purchase of a New Vehicle

While poor credit mortgages are usually not the first option for buying a new vehicle, this is a solution that may be the best option. Your credit rating does not allow you to receive a car loan with the most competitive interest rate. When you talk with a lender about a second mortgage, you find that the interest rate is lower. Even better, the equity in your home is sufficient to lower the risk the lender will take on by doing business with you.

Once you are approved and you have that new vehicle that will get you to and from work, make those payments on time. Doing so will help your score improve as the months pass. By the time you pay off the second mortgage, your score should be significantly higher.

A second mortgage is not the answer to every financial situation. Before you choose this solution, compare it with other strategies. If you are convinced that this type of financial resource is the most practical, contact a lender who works with people who have less than perfect credit. You could be approved faster and easier than you expected.