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How to Apply for 2nd Mortgages in Kitchener

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While there are many sources for obtaining 2nd mortgages in Kitchener, there a few things to consider and research before deciding if this line of credit is your best option. Second mortgages are a common way for homeowners to access large sums of money unavailable through traditional means of credit lending. Whether for home-improvement projects or paying for a child’s post-secondary education, a secondary mortgage may be a great way to consolidate debt and lower interest rates without having to refinance your home. Here are some things to take into account before applying:
 

1. Create a Budget to Check if Payments are Realistic and Feasible

 

Taking out a 2nd mortgage is only a viable solution if you are able to ensure payments are made on time and as outlined in your loan agreement. Drafting out a realistic budget of your fixed and variable expenses against your income will allow you to gauge whether the payments will be feasible. Remember, you are putting your home up as collateral, which is nothing to be light about.

 

2. Determine Your Home’s Equity

 

To calculate the equity of your home, you will need to obtain an appraisal for the value of your home and subtract the amount you currently owe from your original mortgage. It is wise to obtain a professional appraisal to determine your home’s current market value. Yes, you will likely need to pay a fee for this, but it will be necessary when it comes time to apply for a second mortgage.

 

3. Find Out Your Credit Score and Arrange a Meeting with Your Bank/Mortgage Lender

 

A good credit score is vital when considering a second mortgage. It will allow you to get a lower interest rate and give confidence in your lender that you are a good candidate for this financing option. Arranging a meeting with your current lender is the first step in your research. They will be most familiar with your situation and will provide you a solid basis for comparison.

 

4. Shop Around

 

Similar to buying a car or home, you should always explore all options before making your final choice. Whether online or through brick-and-mortar establishments, ask for quotes and details on their payment policies. You don’t want to get stuck with heavy penalties and hidden fees. Use the rate you had quoted by your original lender as a base for comparison.

 

5. Research Other Types of Financing Options

 

Although second mortgages are a great way to access a large sum of cash, there are a number of expenses, such as appraisal fees, applications, and closing costs, which come with applying for a second mortgage. Speak with a lending expert to ensure you have been made aware of all options before deciding on this route.

 

With many young professionals relocating for jobs and a growing student population, Kitchener is a fantastic option for those looking to invest in the real estate market. Home values are likely to continue rising as more potential home buyers seek up incoming neighbourhoods. If you are considering 2nd mortgages in Kitchener, take the time to get a professional appraisal, obtain a credit score, and shop around for lenders to get the most for your home.

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