Americans have been tapping their equity from their homes for decades by taking out home equity loans, equity lines of credit or refinancing. When I was child growing up in the sixties, it was inappropriate for neighbors to talk about a second mortgage, because it meant that you mismanaged your money and the implications were always centered on financial trouble. Times have changed, because over 60% of homes purchased today include a second mortgage in the sales transaction.

If you are a homeowner, you have most likely received solicitations all the time to apply for a home equity loan or refinancing your second mortgage. Home equity loans can be efficient tools for financing home improvements and consolidating credit card debt. Home equity lines of credit can improve cash flow, and provide flexibility for investing. Having an equity line of credit secured to your property, can provide a safety net of cash reserves for family emergencies, or sudden investment opportunities. We suggest getting approved for a home equity loan when you need it least. What we mean by that is, “Don’t wait until you are late on your bills or when a close family member needs your help.” Rarely in life can you plan for investment opportunities, financial obstacles. Remember that mortgage lenders and banks can always get you a loan when you need it. For example, If you are late on your credit card bills and the banks report you late to the credit bureaus, there is a good chance that your credit scores have dropped, and you might not qualify for the home equity loan you need. The same is true, for if you stumble across a worthy investment. Typically investments have a small window of opportunity, and by the time you get approved for a second mortgage, and actually close escrow, the opportunity may be gone. » Read more: When Is The Best Time For A Home Equity Loan?