Second Mortgage

Have you ever exceeded your line of credit more than once?

This may have ended in to your bank iincreasing your APR and most of the time they will be unwilling to work with me even though  your have never had a late payment.  

So should you look into taking out a second mortgage on the house as the balace is substantial? Ever thought about the downside to a second mortgage in this case?

A lot depends on the amount of equity you currently have in the property. It may be that your home’s value has increased sufficiently to support a new line of credit with another lender. An appraisal would be required to determine that, but an appraisal would also be required to obtain a second mortgage.

A line of credit is usually originated as an adjustable rate loan based upon the current prime rate plus perhaps an add on for loan to value or credit score. Some offer the ability to covert some or all of that line of credit into a fixed rate second mortgage at specific time of opportunity during the loan term.

A second mortgage is a fixed rate loan, usually a 15 year term. The rate is usually higher than that of a line of credit but the rate will not fluctuate as the prime rate adjusts.

If your current line of credit is an unsecured line of credit, your current bank might consider converting it to a line of credit secured by a 2nd lien against your home.

A second mortgage can indeed be the answer. There are many factors that might make it not the best idea though as well. The interest on the second mortgage is a tax deduction. Your credit card interest is not.

Moreover, if it cleans your slate witht the creditor it may be a very good idea. I would bet that that B of A would extend your line at the lower rate if you paid it off but did not use for 6-9 months. they will want you back.

If you have any questions let me know. Your original mortgage may be on an aRM or interets only and a complete refi may be an even better option. Again many factors.