Second Home Mortgages Pros and Cons
Second home mortgages offer both pros and cons, and it is important that you understand these before you take out one of these home loans so that you can make the right choice for your specific goals and circumstances. Some of the best home mortgage lenders may offer a simple application and an easy to follow process, as well as offering lower interest rates and better loan terms. These loans have become increasingly popular, but they may also be risky in some cases, depending on the specific loan and lender that you have chosen. Second home mortgages can be an excellent product for some, but for others these loans may be a big mistake.
Pros: One of the pros that a second mortgage on your home can offer is cash when you need it, and with 30 year fixed mortgage rates at low levels you will pay less interest over the long term when the rate is fixed. Another advantage with second home mortgages is the tax deduction you may be able to claim. A maximum of one hundred thousand dollars of mortgage interest may be tax deductible. When the proceeds of the second mortgage are used to pay debts which can not be deducted on your taxes the mortgage loan has tax benefits. When mortgage refinance no closing costs loans are used there are no closing costs or upfront fees to pay.
Cons: Second home mortgages also have some cons involved, and these disadvantages may make them less than ideal for some individuals. This type of loan will increase your debt, and in tough economic times or a poor market you could end up owing more than the value of your home, which is referred to as being under water. Mortgage rate predictions show that the interest rates will probably increase, and this could mean higher payments and more interest paid over the life of the loan. Unlike many types of debt, if the mortgage loan is not paid off you could end up losing your home.
Second home mortgages pros and cons should be evaluated on the individual case by case basis. If you do not have the knowledge to evaluate your personal financial situation, get professional help from a personal financial advisor.