Consider the following scenario with regards to obtaining a second mortgage. You purchased your current house six years ago for $60,000 on a fixed mortgage for 25 years. The value of the house has since increased to approximately $100,000. Although you must keep in mind your $15,000 in student loans and $5,000 in credit cards that have to be paid off.
The house is great and you are enjoying it, but it just doesn’t seem large enough anymore. Your options are to add on another room or purchase a larger house. You pull out a pen and paper and list all the pros and cons of each option. Upon much debate, you come down to a dollar crisis. Either option you choose will make it necessary to obtain more money.
Upon sitting down with your mortgage broker, he suggests that you take out a second mortgage on your house. He explains that based on the amount of time you have lived in the house, the book value, and the portion of the house you have already paid off, the second mortgage will give you a total of $15,000. This is perfect for you! Especially because after you got a quote on attaching an additional room, it would only cost you $7,000.
As seen in this scenario, a second mortgage can be the answer to your financial issues. However, before jumping in to anything, speak with a professional who understands your situation and options, like the people in the above scenario did. Contact a mortgage broker and discuss whether a second mortgage is best in your situation.
