Want to tap your home equity but keep your current mortgage? Here is how a second mortgage works
A second mortgage lets you borrow against your equity without replacing your first loan. Understand how it works and what to weigh.
The situation many homeowners are in
Lots of homeowners have a first mortgage they are happy with and would rather not give up, yet they need funds for a renovation, debt consolidation, tuition or another goal. Replacing the first loan with a new cash-out refinance would mean replacing a loan they like.
How a closed-end second mortgage works
A closed-end second mortgage is a separate loan, secured by your home, that sits behind your existing first mortgage. You receive a set amount up front and repay it on a set schedule. Your first mortgage stays exactly as it is.
What to weigh
Sometimes a cash-out refinance is the better fit, and sometimes leaving the first loan alone is. The right answer depends on your numbers and your goals.
- You will have two loans and two payments instead of one.
- A second mortgage has its own costs and terms, which can differ from your first loan.
- Your home secures the loan, so it is important to borrow only what you can comfortably repay.
- Availability depends on the property, the amount of equity and your qualifications.
Compare your options
We can look at both approaches side by side and explain the costs of each before you commit to anything. There is no obligation to ask.
Questions about your situation?
Tell us about your loan and a licensed originator will follow up. There is no obligation to ask.