3 Reasons to Get a Second Mortgage

Getting a second mortgage can be very beneficial to you depending on your situation. There are many different reasons that borrowers like to use second mortgages. Here are a few reasons that you might want to consider getting a second mortgage.

1. Avoid PMI

One of the most popular reasons to get a second mortgage is to avoid private mortgage insurance. Whenever you purchase a new house, if you have to borrow more than 80 percent of the value of the house, you are going to have to pay private mortgage insurance. This can add some significant money to your monthly payment and make it unaffordable.

2. Avoid Jumbo Loans

If you are considering purchasing a larger house, you might be looking at jumbo mortgages as a possibility. However, with jumbo mortgages come higher interest rates in most cases. These loans are considered to be riskier for lenders and they will attach a higher interest rate because of this. If you get a second mortgage, you can avoid getting a jumbo mortgage and paying higher interest rates.

3. Conserve Capital

By utilizing a second mortgage, you could potentially save your cash reserves. If you have to put down 20 percent on a house, this can significantly cut into your savings. By using a second mortgage, you can avoid this scenario.