Buying a Home
Why should you avoid getting a 2nd mortgage to cover the down payment on a primary mortgage?
Why should you avoid getting a 2nd mortgage to cover the down payment on a primary mortgage?
If you don’t have 20% to lay down for a mortgage, you are not ready to be a homeowner and it really is that simple. Many lenders are being “creative” in getting people into homes they should not be buying because they really cannot afford it. The 2nd mortgage is the hot thing going in many locations today and it should be avoided. Just because a lender is offering you money, doesn’t mean you should take it!
Basically, the 2nd mortgage is acquired from a 2nd lender in many cases to cover the down payment and avoid paying PMI (insurance paid to the lender when you cannot come up with the 20% down payment). This is no fix. It simply adds another loan to the mix with an interest rate that continues to add expense to the process. This causes you to be house rich and cash poor. That is a bad idea. Stay away from 2nd mortgages!