By Eustacia Parker
If you want to buy yourself a second home or a vacation home near the ocean, on a lake or in the mountains, you can go for second home mortgage. You can also use this extra cash for many other reasons like, paying off your credit cards or buying a car.
What a second home mortgage is
Second home mortgage is a mortgage on a property in which you are not currently living. It is not necessary for you to have a mortgage on your first home.
If you do not want to live in the home that you want to buy and want to stay elsewhere, then also the mortgage will be considered as a second home mortgage. So, in short, it can be said that second home mortgage is a mortgage on a property that is not your primary residence.
Benefits of second mortgage
Some of the benefits of second mortgage are mentioned below:
• The underwriting guidelines for a second mortgage are not as strict as the first mortgage.
• Though the lenders charge a large down payment and a high interest rate for the second mortgage, but, the transaction fees in some cases may be lower than that you need to pay for a refinance.
• It also takes less time than to refinance your loan.
• You can get additional cash at your hand to fulfill your emergency needs like paying off your credit bills, making payment towards another loan, financing your child's education, etc.
If you have plans to sell your home in the near future, then opting for a second mortgage will not be a good choice. The lenders generally charge a higher interest rate and a higher down payment for second home mortgage.
They consider you financially risky having more chance of being a defaulter, as you have to make payments for two mortgages. If you plan to give out your home for rent, the lenders will want you to put down an even more amount towards down payment. So, it would be better to refinance your first mortgage or take a home equity loan on it.
Eustacia Parker is a deliberate writer for californialoans.org. Her writings include home loans, auto loans, personal loans, second home mortgage etc. She is a financial writer by profession and has specialization in dealing with financial problems and its solutions.
Article Source: http://EzineArticles.com/?expert=Eustacia_Parker
Should You Go For a Second Home Mortgage?
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