If you are a seasoned homeowner and are thinking about tapping into your home’s equity for some extra cash, you may be wondering what your options are. This includes deciding whether a second mortgage or a reverse mortgage is right for you.
So, to help provide some assistance, your local mortgage brokers with Loewen Group Mortgages have listed the key differences between a Burlington second mortgage and a reverse mortgage.
What Is A Reverse Mortgage?
A reverse mortgage is where your home is put up as collateral and you access your home’s equity. The equity in your home is the difference between your home’s appraised value and your loan balance. Therefore, if you have been living in your home for a significant amount of time and have always made payments on your mortgage, odds are you have accumulated a lot of equity in your home.
With a reverse mortgage, you can access up to 55% of these funds without needing to sell your home and there are also no monthly mortgage payments required until you decide to move out. To obtain a reverse mortgage, however, you have to be at least 55 years of age.
What Is A Second Mortgage?
A second mortgage has no age restrictions, unlike a reverse mortgage, however, you would be obtaining a Burlington second mortgage in addition to your existing mortgage. This means you will be making two separate payments every month on two separate mortgages. To qualify for a second mortgage, you will need to have at least 20% equity in your home, have a steady income, and have a good credit score.
Benefits Of A Second Mortgage
There are many benefits to obtaining a second mortgage. This includes giving the borrower access to a large sum of money that can be used however they want. You can apply for a second mortgage to help pay off any debt you have, such as high-interest credit card loans, student loans, or car loans. You could even use this money for home renovations or to purchase more real estate. Or, maybe you have always wanted to go on a luxurious vacation? Well, you could use this amount to fund your trip. Whatever the case may be, you can spend your home equity any way you want.
For more information on a Burlington second mortgage or to get started on your application today, please contact the Loewen Group Mortgages Team at 289-337-4029.