Getting a Second Mortgage

If you’re considering taking out a second mortgage, there are a number of simple steps you should take to ensure you qualify for the loan. Here are a number of things to keep in mind when looking into a second mortgage:

• Even though you already own a home, prospective lenders will check your credit history to verify you’re paying current loan on time, haven’t taken out any large debts, haven’t been delinquent on any debts and have never filed for bankruptcy. Confirm your credit history is clean to see what rate you’re likely to qualify for.

• When you decide how much money to borrow, you should first confirm that you and your primary lender agree on how much you still owe. If your number doesn’t match the banks, confirm all your payments have been processed properly.

• Use real estate websites to assess your home’s current market value. It may not be as much as you think if the market is declining. Lower market value will limit the amount you can borrow against your equity. A rule of thumb is that the combined balance of your first and second mortgages should never be more than 80 per cent of your homes value.