You also need money for home maintenance and repairs There are also home maintenance issues that are not included when you qualify for a home loan. If you live in a part of country that’s particularly hot or cold, your heating and air conditioning bill could easily add up to a couple of hundred dollars per month.

Your home loan package does not include budgeting for lawnmowers, landscaping and fixing broken windows. Some of these expenses can be put off until a later day, but some of them will require your immediate attention once you move into your home.

Know your spending habits to gauge how much debt you can carry If you are used to living paycheck to paycheck and generally not taking care of your budget as a renter, you will probably carry over some of same habits to your new home.

The best way to avoid a financial disaster is to make your home loan a part of your financial life instead of centerpiece of your financial life. If you are stressed out about money issues from very first move in, it is unlikely that you will enjoy your new home or anything else in your life for a long time.

It’s an exchange. You are exchanging all that hard earned equity for access to cash. If a homeowner is not careful about getting a second mortgage he or she can end up with a very large debt, no equity and a big house payment.

In addition, a second mortgage can lead to an extension on life of your loan. If you don’t have cash to come up with a huge monthly payment, terms on your second loan can extend a 30-year mortgage (your first mortgage) into a 45-year mortgage (with additional fifteen years to pay off second loan).

So what are some good reasons for a second loan? Debt seems to be primary reason homeowners go into this type of arrangement. Credit card, student loan, automobile and personal debt can all be wiped out and then financed at a much lower interest rate.

Basically a second mortgage is a quick way to convert some of your equity to cash so you can pay off some of your other high interest debt. If used wisely, it can be a powerful debt management tool.