A Second Home Mortgage: 4 Things Readers Need to Know

If you’re shopping for a second home mortgage, you may be wondering where to begin. While getting a second home mortgage may seem simple enough, it’s often surprisingly complex. Luckily, there are dozens of ways to streamline the process and ensure that you understand exactly what you’re getting into when you start shopping for a second home.

4 Things to Know About a Second Home Mortgage

Shopping for a second home mortgage can feel confusing. Fortunately, it’s easier to know where you’re coming from if you understand these four important things about a second mortgage:

1. Second mortgages come after your first mortgage

While this may seem like a simple concept, many people don’t fully understand it. When you apply for a second home mortgage, it’s important to remember that the lender who financed your first mortgage now takes precedence over the new lender of your second home mortgage.

This is true throughout the term of the mortgage (or at least until the first mortgage is paid off) and is something that can influence the process of applying for and being approved for a second home mortgage.

2. Second and first home mortgages follow essentially the same process

While some people assume that getting a second home mortgage will be easier than getting a first home mortgage, they follow the same process. To get a second mortgage, you’ll still need to apply, fill in all of the paperwork, provide proof of income and finances, have the home appraised, and supply any additional paperwork the lender may need. Just because you’ve been approved for a mortgage before doesn’t intrinsically mean that your second mortgage will go much faster.

3. Second mortgages are often more difficult to be approved for

When it comes to getting a second home mortgage, many borrowers actually find that they’re more difficult to get approved for than first home mortgages.

Because taking out a second mortgage puts you in the league of a real estate investor, lenders are more cautious about how they give out money and closing your second mortgage may well take longer.

4. A second home mortgage results in two separate home payments

While this may seem simple, many people assume that taking out a second mortgage allows them to simply roll their two separate home payments into one. This is not true. Instead, two separate mortgages equal two separate payments, both of which you’ll need to make on time each month.

A Streamlined Second Home Mortgage Starts Here

When you fully understand the process of obtaining a second home mortgage, it’s easier to ensure that you get the best possible rate and make the best possible financial decision for you. While a second mortgage isn’t a good idea for all borrowers, it can be a great way to produce financial freedom for many beginning investors.