Mistakes Taking a Second Mortgage - Mortgage Professor

Mistakes Taking a Second Mortgage

Consolidate existing debts in a new second mortgage without considering the implications for your ability to terminate mortgage insurance, refinance your first mortgage, move to another city, etc .

Raise needed cash with a new second mortgage, or with a cash-out refinance, without comparing the costs of the two alternatives.

Pay for mortgage insurance, or take a second mortgage to avoid mortgage insurance, without considering whether the alternative might be cheaper.

Raise cash by borrowing against a 401K rather than by taking a second mortgage.

Neglect to ask what the margin is on your HELOC.

Neglect to ask about the second mortgage lender's policy on subordination.