What Can You Do With a Second Mortgage?
What can you do with a second mortgage, what can you not do with
a second mortgage? There are so many options available for
second mortgage money that we're going to take an entire article
and examine some of those options. Home improvement, college
education, business ventures, even a luxury vacation is an
option for your second mortgage money.
Let's start with the more intelligent options: home improvements
and college educations. Home improvements are often a necessity
after several years of occupying your home; when you actually
live in a home, everyday use of the home encourages wear and
tear. Carpet, appliances, even the paint on the wall begins to
need repair. How do you pay for that require? Operating on a
fixed income does not leave room for extra repair expense, so
how does the average homeowner afford such an expense? Second
mortgages are the most feasible option when repairs are needed
or expansion is necessary. The interest deduction on a second
mortgage if the mortgage is used to increase the value of the
entire home, execute repairs within the home or increase the
size of the home is a completely tax-deductible interest expense.
What about college education funding? Until recently, the most
affordable option for college funding and financing was the
second mortgage. Over the course of the last 10 years, private
student loans, increased government funding, and the increase in
the nontraditional student enrollment have led to a decrease in
second mortgage options as a funding option for education. It
has not however completely eliminated the second mortgage is a
way to pay for college education; and today many parents still
find this option the more attractive, affordable, and as a
whole, the least expensive option for college education funding.
After all, we are simply trading an equity investment in our
home, for an investment in our child's future.
Now, let's take a moment to talk about some of the riskier
options for taking out a second mortgage or home. Sometimes, we
need to take the step into business ownership; sometimes we lack
the funding to take that step. The equity we've managed to
establish in our homes is an excellent source for that funding
but is it the best option for the funding? Sometimes the answers
you sometimes the answer is no; at any rate it is quite often
the option most exercised by would-be entrepreneurs. My
suggestion here is this: if you're taking the money to open a
business that is a continuation of your business background, a
business in which you have extensive experience and knowledge,
then I believe you're making a wise investment. Otherwise, I
would not risk the equity and savings in my home.
Well, we looked at some of the better choices for taking a
second mortgage, and we looked at some of the riskier choices
for taking out second mortgages, but what about some of the just
plain nonsense reasons for taking out second mortgage? What are
some of those reasons? New cars, expensive vacations, or plastic
surgery in my opinion would fall under nonsense reasons. But not
according to the average consumer. Everyday, new cars,
vacations, and plastic surgery take place at the expense of home
equity savings. Or they legitimate uses of home equity in
second-mortgage funding? Absolutely. Are they tax-deductible
reasons? Probably not; but nonetheless, consumers use second
mortgage money every day to pay for these choices.
The reasons given and listed here are but a very small few of
the actual examples of consumers spending of the equity in their
home. A second mortgage was a tool intended to aid the consumer
and provide access to the equity in their home, equity could be
used to increase the value of their home or make worthwhile
contributions to their family life. And as usual, some consumers
actually use the second mortgage for this reason; many
consumers, don't. The second mortgage option has become like
many other options in this day in time, a fast way to spend our
selves into deeper debt.
At some point, the consumer will become ready to retire, retire
to a home without a home mortgage payment. The way to accomplish
this end is to build equity in a home and payoff the mortgage.
That's one thing you can't do with as a mortgage.