Taking out a second mortgage on an investment property can be a great tool to use stagnant equity to make money. However, second mortgages always come with a risk and can be difficult to obtain, particularly when trying to take one out on an investment property. You should first learn about the different kinds of second mortgages.

  • One choice is a line of credit called a home equity line of credit, which means you use the money as you need it.
  • The other option is a home equity loan, which is a lump sum of money.

Either option is a good one depending on your situation.  You should also consider that a lender will only give you a loan that is worth a percentage of the property and second mortgages carry high interest rates and even higher ones for second mortgages on investment properties, and if you will be able to make these payments each month. A missed payment can be very risky because you could lost the property since that is the asset the loan is weighed against. In order to properly educate yourself and secure your loan, you should do a few things first, like checking your credit score, finding out what your property is worth, do some research, shop around, determine what kind of second mortgage is best for you, and always be sure to read the fine print when signing. Second mortgages can be a great way to pay off debts, buy new properties, and many other things, but do always come with risks that should be considered.

Key Points:

  • 1You can use a second mortgage to fund obtaining additional property.
  • 2You should be aware of the risks before going for a second mortgage.
  • 3Getting a second mortgage is great if you are confident that you can make the payments on time.

Tax deductions, to this day, remain one of the single greatest benefits of real estate investing.