Your home is the most valuable asset you possess, especially if you’ve owned it for several years or the property value has risen significantly. A second mortgage allows you to access the equity your home has accrued without selling it. Homeowners can use these funds for college, renovations, or anything else they wish. Below are answers to some of the most common questions about second mortgages.

Second Mortgages FAQ

Do I need to pay off my first mortgage before taking out a second?

As long as you can afford the payments, you don’t need to pay off your first mortgage before applying for a home equity loan. However, most lenders require the total outstanding debt to fall under a certain percentage of the home’s value, typically 80%.

How are the funds disbursed?

Lenders offer several options for borrowers. Some provide a lump sum of the loan amount, while others issue a line of credit the owner can borrow against as they see fit.

Is a second mortgage the same as refinancing?

Refinancing your mortgage means taking out another loan to pay off the current balance, usually to take advantage of a lower interest rate or switch from an adjustable mortgage to a fixed rate. With a second mortgage, your original loan remains in effect, as you’re only borrowing against the equity in your home.

Are interest payments on a second mortgage deductible?

Although the Tax Cuts and Jobs Act of 2017 suspended the ability to deduct interest payments on second mortgages, borrowers can still claim the exemption in some circumstances. According to the IRS, if the funds are used to repair, renovate, or substantially improve the property, you may still be able to claim the cost on your returns.

Since 1925, Armstrong County Building & Loan Association has provided friendly service and a wealth of lending products to Pennsylvania homeowners. With low closing costs and a personal approach to your financing needs, they make taking out a second mortgage as easy as possible. Visit their website for an overview of their lending products, follow their Facebook for news and update, or call (724) 763-7137 for an appointment with a loan officer today.