Second Mortgage Tips On Paying Down The Loan...

By L. Seals

With hard times looming, many homeowners have the need to fall back on home ownership as a way to get through tough situations. That can lead to the circumstance of taking out more than one mortgage for their home. This way, they can get significant problems of life solved. Credit card bills, medical bills, and so forth. This is where a second mortgage comes into play.

The only problem with that option, is that that 2nd mortgage is actually secured to your home, which can cause nightmarish problems if you have no ability to pay down that loan. This can be a way to solve problems, but also a way to create a new problem.

Wouldn't it be great to have an unexpected amount of cash fall out of the sky? A helpful inheritance? Maybe even win the lottery? Some of us may want to stash that cash away for a rainy day, which is actually a really smart thing to do. However, if you have outstanding bills that are increasingly worse, you may want to distribute that money to those problems. In the case of a second mortgage, use this money to pay down your principle. And of course, make sure your clear it is going to the principal.

The following situation is very typical in the credit card industry also:

When making payments toward your mortgage, be sure that you will not be penalized for paying the loan off early. Obviously, the credit cards need to make their money too, (or do they?) so they will usually stick you with some type of perk for their trouble, and may prevent you from being able to pay down your debt ahead of schedule. This is so that they can make money on interest. Who wants to give you money for nothing in return, right? This is usually only during the first few years though. You should try to pay the one without the penalty off first. And if possible, the one with the highest interest rate...