Start your application to purchase your
dream home or refinance today!
Looking to see what you may qualify for?
Get prequalified today!
A second mortgage (sometimes just called a "second") is when you take out a home loan against a property that already has a mortgage on it. When you get a second mortgage, you use your home as collateral to gain access to cash locked up in the value of your home.
You can use this money to pay for nearly anything, which is why many homeowners apply for a second mortgage.
Home Equity Loan
With a home equity loan, you get your money in one lump sum. You then pay back what you borrowed over an agreed-upon term with fixed payments. This is a smart option if you know exactly how much money you need to borrow or prefer receiving all the funds at once.
Let's look at the pros and cons of a home equity loan:
Pros
Fixed interest rate: You'll know your monthly payments in advance, making it easier to budget repayment.
Lump-sum proceeds: Flexibility to use the money however you want.
Cons
Closing costs: Closing costs range from 2% – 5% of the total cost of the loan. There may also be appraisal and title search fees.
Risk: The bank may foreclose your home if you default on your home equity loan.
A HELOC is like a credit card, meaning you have a set credit limit where you can borrow as much or as little as you need. However, unlike a credit card or a home equity loan, this type of second mortgage has two time periods:
Drawing period: During this time, you can withdraw whatever amount of money you want (up to your limit), making monthly interest payments only on what you borrow.
Repayment period: Requires repayment of the principal and any interest on the amount you borrowed. Borrowing is no longer allowed at this time.
The pros and cons of a HELOC:
Pros
Flexibility: Use only what you need.
Delayed payments: Your payments begin when you withdraw money, not sooner.
Cons
Variable interest: Interest rate fluctuates based on the market. This could make it challenging to budget your payments.
Annual fees and other costs: Some HELOCs tack on a yearly maintenance fee, an inactivity fee, a minimum withdrawal fee, or even an early termination fee.
Risk: A HELOC uses your home as collateral so the lender could foreclose on your home if you don't repay what you borrow.
Pay off a high-interest rate loan, potentially saving you hundreds or even thousands of dollars.
Fund home improvements like a kitchen remodel or adding another room to your home.
Fund big purchases like higher education, trade school, a vacation, or new home appliances.
Have the funds available in case of an emergency like the car needing repairs or a family member requiring medical treatment.
Second mortgages give you a wealth of options for using the money and how to repay it. Contact us today for more information and to quickly get access to your home equity.
Our Website strives to ensure that its services are accessible to people with disabilities. Our Website has invested a significant amount of resources to help ensure that its website is made easier to use and more accessible for people with disabilities, with the strong belief that every person has the right to live with dignity, equality, comfort and independence.
Our Website makes available the UserWay Website Accessibility Widget that is powered by a dedicated accessibility server. The software allows tr212061.lhp207.lhpdomains.com to improve its compliance with the Web Content Accessibility Guidelines (WCAG 2.1).
Our Website accessibility menu can be enabled by clicking the accessibility menu icon that appears on the corner on the page. After triggering the accessibility menu, please wait a moment for the accessibility menu to load in its entirety.
Our Website continues its efforts to constantly improve the accessibility of its site and services in the belief that it is our collective moral obligation to allow seamless, accessible and unhindered use also for those of us with disabilities.
Despite our efforts to make all pages and content on Our Website website fully accessible, some content may not have yet been fully adapted to the strictest accessibility standards. This may be a result of not having found or identified the most appropriate technological solution.
If you are experiencing difficulty with any content on Our Website website or require assistance with any part of our site, please contact us during normal business hours as detailed below and we will be happy to assist.
If you wish to report an accessibility issue, have any questions or need assistance, please contact us by sending an email to: ClearLake@HomeTrust.com