What are the differences between a second mortgage and refinancing?
March 11, 2024Firstly, when considering credit applications, it’s important to recognize that all credit inquiries impact your credit file. This applies to second mortgages as well. Therefore, to maintain a healthy credit score, approach credit applications strategically and avoid unnecessary loan applications that access your credit history
Secondly, it’s important to understand that second mortgage interest rates tend to be higher than those for first mortgages. Certianly, as the loans are generally short term and the lender and investor returns are more demanding. However, lenders also see the second mortgages as riskier, which influences the rate.
Thirdly, lenders may have less stringent income verification requirements for second mortgages. However, applicants should exercise caution and avoid overestimating their repayment capacity.