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A Second Mortgage can help you get a First
Many people are stuck in the 1950's when having to have 20% down on a home was instilled into the population. When you bought a home then, you didn't even consider having a second mortgage. You just saved up until you had enough money for a down payment. Then you bought your home and never moved from it. These days it's different, you can get into a home with no money down and a second mortgage is the norm. Now you can often use your second mortgage much like your down payment and lenders will be more willing to help you get into a home in the first place.
How do I get a second mortgage?
If you are looking to buy a home, or even refinance your existing one, your lender can set you up with a second mortgage that will help you get the first mortgage. One big type of loan program is an 80/20 loan. With this type of loan, your first mortgage is for 80% of the total loan amount and the second mortgage is for the remaining 20%. Your interest rates on the first mortgage are generally more reasonable than they will be on your second mortgage. However, it is a wonderful way to be able to afford a home without the traditional 20% down.I have enough for a down payment, should I still get a second mortgage instead?
You may or may not want to use up your cash to pay for down payment on a house.
Taking out a smaller second mortgage may allow you to keep your cash on hand to use for other things such as investments. However, you may want to invest the money initially to lower your total monthly payment. The best way to decide if you need to get a second mortgage is to talk to a lender and your accountant to devise a financial plan that will allow you to best utilize your money.