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How to Use a Second Mortgage Effectively and Safely

You can take advantage of a variety of credit products designed to help you finance purchases that you cannot pay for out of your pocket. The second mortgage loans are risky, but highly beneficial, if you know how to use them correctly. Get some helpful advice that will allow you to make the most out of the opportunities which they have to offer.

Take out a second mortgage to save on PMI when you buy a house.

Property buyers who take out a home loan and make a down payment of less than 20% need to get private mortgage insurance. It costs around 0.5% of the principal amount so it is certainly not cheap. You can save on it by financing the purchase of your property with both a primary and secondary loan. You will save about 4% of the monthly insurance premium. This may not seem like much, but, given that you will pay such premiums every month for over 10 or more years, the savings which you can actually generate are considerable.

Use the equity in your home for cheap financing and debt consolidation.

The main reason why home owners take out a second mortgage is to tap into the equity that they have in the property. This is a cost-efficient way to finance a major purchase or invest in your child's college education. This is because the interest rate on such a loan will be much lower compared to that on a personal loan which is unsecured. Given this great benefit, you can use such a credit facility for consolidating your existing debt. That way, you will get more affordable monthly installments. You may be able to save money as well.

What's more you can borrow money in two different ways. You can take out a lump sum in the form of a home equity loan or get a home equity line of credit which you can use like a credit card.

Get prepared for a second mortgage.

You are certainly aware of the fact that such a loan will have a higher interest rate than your primary home loan and that if you default on its repayment you risk losing your property. Given all this, you have to do your best to ensure that you can repay the loan. Make sure that you have sufficient disposable income to pay the monthly installments. You have to be prepared the closing costs as well. You should also try to improve your credit score so that you have higher chances of securing the new credit facility.

Compare different loan facilities.

You can take out a second mortgage from any lender that you like. You should take advantage of this opportunity and shop around. You should compare different interest rates and the closing costs as well. These costs usually come up to several thousand dollars. It is better to pay them out of your pocket in advance to avoid being charged interest on them.

Last, but not least, it is wise to set aside a portion of your savings to be used as reserves for repaying your second mortgage if your financial situation gets tough.


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I'll admit it, my first impression of him was that he was distracted, but first impressions can be wrong and I realize now that what he's looking for most is a friend. Is that really too much to ask for?


We are NOT the City Shelter to where pictures were taken. FOR MORE INFO ON THIS PET please contact:
Animal Care Centers of NYC (ACC) at (212) 788-4000
Ask for information about animal ID number Sax ID# 48252

Shelter contact information:
Phone number (212) 788-4000 (automated only)
Brooklyn Shelter: 2336 Linden Boulevard Brooklyn, NY 11208

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Is Taking Out a 40-Year Mortgage a Good Idea?

Most home buyers looking for financing tend to focus their attention on the 15 and 30-year mortgage loans with fixed interest rate. How about their 40-year counterparts? They are less conventional but they may be the best option for you. Find out more about the way in which they work and about their pros and cons. This will help you make the right decision given your particular situation.

What Is a 40-Year Mortgage?

This is a home loan which is repaid over a 40-year period. It comes with a fixed interest rate. This means that you will pay a monthly installment of the same size over the entire term of the loan. As you can see, it does not differ from its 15 and 30-year counterparts in terms of structure. The only difference is that the repayment period is longer. Let's look at the benefits and drawbacks of this type of credit product. They are determined primarily by the longer term.


You can borrow more money - Given that the repayment of the 40-year mortgage will be spread over a longer period of time, the monthly installments will be lower and consequently more affordable. This allows you to get larger financing and buy a bigger and better house.

You get to pay lower monthly installments - This is due to the spreading of the repayment over a longer period of time, as explained previously. The lower monthly installments make the loan more affordable. Consequently, the risk of default is lower and so is the risk of losing your home.

There is no risk of interest fluctuations in the long run - No matter how turbulent the financial and mortgage markets are in the next 40 years, your interest rate will not change even by a fraction of the percentage point. You will have peace of mind that no matter what happens, your loan will never become too expensive to repay.

Tax advantages - You can write off the large amount of mortgage interest that you will have to pay if you qualify.


You will pay more interest - Since interest on the mortgage principal is charged for 40 years, its total amount is naturally higher than with 30-year loans and especially with 15-year ones. Hence, such a 40-year loan will be more expensive.

Equity is built more slowly - With traditional loan amortization, the monthly payments consist of a larger interest chunk for the most part of the repayment period. This is the case with the 40-year loans as well. However, given that the period is much longer, the proportions change in favor of equity much later. The slower building of equity limits your ability to use it for getting financing and for other purposes.

The 40-year mortgage loans are typically harder to find and come with slightly higher interest rate - These are certainly serious drawbacks to consider. The higher interest is due to the fact that the longer term poses a higher risk for the lender.


Overall, 40-year mortgage loans are suitable for individuals whose main goal is to keep their monthly payments as low as possible and for those who plan to keep their home in the long term. It may be a good choice for those who want to take advantage of the lower monthly payments initially and then refinance their home loan.