Why should you take out a second mortgage or a home equity line of
credit instead of refinancing?Well,………You Shouldn’t!!
Why Not?
1. Second Mortgages usually have an interest rant that is twice or
even three times as high as your first mortgage rate. You can refinance
instead and keep a very low rate. In the long run a second mortgage will
just cost you money in interest charges.
2. Home equity lines of credit are designed for mortgage account
executives (salespeople) to sell you on using it like a credit card
attached to your home. They will try to convince you to use it over and
over again.
3. A refinance loan is better for the equity in your home. Very few
companies will refinance your home at 100% of it’s value without forcing
you to take out a second mortgage. You don’t want to use 100% of your
equity because that means you no longer have that equity to fall back on
in emergency situations.
4. Second Mortgages and Home Equity lines of credit are designed to
provide account executives (salespeople) with another tool to sway you
into putting another commission in their pocket.
5. Your equity is a precious thing and should not be used for
unnecessary add ons or impulse buys. If you don’t need it and there is
even a slight chance you can’t afford it, then don’t get a second
mortgage to buy it.
The only reason that I would ever recommend a second mortgage or a
home equity line of credit is in an emergency situation. Only when there
is no other option and you must take out a loan would I recommend either
one of these options.
