Many Northwestern Wisconsin area homeowners are now in a positive equity position and may be tempted to take out a second mortgage on their home in the Chetek WI area. And while the thought of your increased equity position may thrill you, you won’t want to make any quick decisions this year.
A second mortgage—often referred to as a home equity loan—is as it sounds, an additional mortgage on your home that allows you to tap into the equity of the property. Your home is used as collateral and you are able to use the loan for upgrades, renovations or any purpose you choose. Six Lakes Realty has included a few of the pros and cons of taking out a second mortgage below, so you can decide if this is the right decision for you!
Access to cash for home projects.
If your Chetek area home is in need of updating, taking out a second mortgage will allow you access to funds to complete a series of home projects at once. Perhaps you’ve been putting off that kitchen renovation or are thinking to, your second mortgage will allow you to tackle the work now rather than wait until you can save the money on your own.
Access to great interest rates.
Taking out a second mortgage will allow you to access funds with a great interest rate. If you have been thinking about taking out a loan for business expenses, college tuition or another purchase, but were unable to lock in a great rate on another loan or unsure of depleting your savings account, this could be your best option.
Using your home as collateral.
It’s important to keep in mind that taking out a second mortgage puts your home up as collateral. The interest rates on a home equity loan are typically much lower than credit cards, but you could risk your home if you are unable to pay the loan back. Take a good look at your finances prior to taking out a second mortgage to ensure you have enough to cover the payment each month.
Spending can contribute to more debt.
Before you take out a second mortgage on your home in Chetek, thoroughly consider what you will be doing with the money. You will want to make sure your spending is on worthwhile expenses like home projects or college tuition, to name a few. Having access to hefty funds can prompt homeowners to spend frivolously which in turn leads to more debt.
We look forward to hearing from you!
Six Lakes Realty
Office: (715) 924-4806