Ads for second mortgages don't always make it clear that they are secured loans. That may sound good, but the security isn't for you - it's for the bank. When you take out a second mortgage, you are promising the lender that if you can't make the payments; they can get their money back by selling your house. That is the single most important thing you need to understand about second mortgages. If you default on a second mortgage, you CAN lose your home.
Reasons to take out a second mortgage.
Those same ads also often use tempting images to convince you that taking out a second mortgage for fun things is a good idea. Why wait for that cruise when you can put your house on the line to finance it? It's best to use savings and earnings for fun things and luxuries. A second mortgage is a great way to fund things that will last and give you a return on your investment. Among the best reasons for a second mortgage are
- paying for education and training
- making improvements or repairs to your home
- paying for once in a lifetime events
- paying for once in a lifetime events
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