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Pros & cons of second mortgages

Published: Aug. 25, 2021 at 9:19 AM EDT
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RICHMOND, Va. (WWBT) - If you own a home, it’s very likely the value’s risen a lot this past year.

A big question many homeowners face is if and when they should consider a home equity line or getting a second mortgage.

Maybe you want to re-do your kitchen, or bathroom and need a loan to do the work.

Michael Joyce with the Richmond financial firm Agili, says you should really look at a home equity loan first. “You don’t necessarily have to take it out right away. You can save it for a rainy day. The interest rates are pretty attractive on those, though they can rise,” Joyce said.

He says typically a home equity line of credit is a better option than a second mortgage.

But some banks are NOT offering these loans right now and a second mortgage may be the only option.

Joyce says if that’s the route you have to take, the cautions against using the money for ongoing monthly expenses.

He says to make sure you are using it to actually increase the value of your home.

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