The dreaded/savior second mortgage has come and gone just like the Real Estate bubble. You might say the second mortgage was the primary culprit for the bubble? Ultimately, the second mortgage was only a product and as products go, it all depends on how it was used. The Key to A Second Mortgage: Pros and Cons are many. Again, it all depends on how you use it.

The key to a second mortgage is understanding its intended purpose. As consumers, we need to understand that it is a loan on the very house you live and that the loan first and for most needs to be paid back. The bank or the lenders are not interested in owning your home, by no means, they simply lend and secure the loan on the home. Since your home is and supposed to be your biggest asset, they are banking on the loan being repaid back.

Like they say, the Key to A Second Mortgage: Pros and Cons are many, including having access to capital for an emergency. A sale at Macy’s that only comes but once every weekend is not considered an emergency. Maybe you need to send your kids to college and or need to pay for a surgery. Either way, the key is to know your intended purpose.

Having that line or loan available to you whenever you want does give you a sense of security, however on the other hand, not understanding the key pros and cons of a second mortgage can and will lead to financial disaster. I am sure your neighbors were not the only ones who took on a second mortgage and paid off the cars, credit cards, upgraded the landscape and you name it, all the other random things they purchased.

A second mortgage allows you use of your available equity in your home for many things. Some people who took on a second mortgage did so with the right intention, however after paying off all their debt and rolling it on their home, they found themselves owing more than what the house was worth and so that made it hard to stay in their homes. This is called upside down on a mortgage. When you find yourself in this situation it can be very stressful and there may not be a lot of help for you. You borrowed the money and the bank needs you to pay it back. Government programs were available, however for a lot of homeowners it came way too late. Now that the economy is back and home prices have somewhat stabilize, there is more second mortgage activity in the banking sector.