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If you need money for home improvements, college tuition or another purpose, you might be able to secure funds with favorable terms through a second mortgage. Before you do so, it’s important to make sure you understand the terms and potential risks.

How Does a Second Mortgage Work?
A second mortgage is a loan that allows a homeowner to borrow against the value of their house by using it as collateral. A second mortgage draws upon the equity that has been accumulated. Equity can grow when mortgage payments lower the loan balance and/or when the value of the house increases due to renovations or a change in the real estate market.

The loan that was used to buy the home initially is the first mortgage and is secured with a lien on the house. A second mortgage can be subject to a fixed or variable interest rate. A second mortgage typically has an interest rate that is lower than rates for credit cards, but a little higher than the rate for the first mortgage.

Types of Second Mortgages
One option is to receive a lump sum of money to be repaid over a period of time. A lump sum second mortgage would typically require monthly payments that consist of a portion of the loan balance and interest.

Another option is to open a home equity line of credit. You could borrow money once or several times, up to the available credit line, and gradually pay it back.

Pros and Cons of Second Mortgages
Since a second mortgage uses the house as collateral, you could probably borrow more than you would be able to through a conventional loan. The total amount that can be borrowed depends on the lenders policies.

To obtain a second mortgage, you would need to pay for an appraisal, origination fees and a credit check, which could total thousands of dollars. Since a second mortgage uses a house as collateral, falling behind on your payments could put you at risk of foreclosure.

Reasons to Get a Second Mortgage
A second mortgage should only be used for a legitimate purpose that is likely to benefit you in the long run. For example, it would make sense to use a second mortgage to make repairs and improvements that would increase your homes value and eventual sale price. A second mortgage could also be a good idea if you used the money to pay for a degree that could help you secure a job with a higher salary in the future. If you wanted to consolidate high-interest debts, you could obtain a lower interest rate through a second mortgage.

Is a Second Mortgage Right for You?
A second mortgage can help you meet your long-term financial goals. Before you take on a new loan using your home as collateral, be sure that you understand how it works, and make sure you can afford the monthly payments in order to avoid the risk of foreclosure.

This article is intended for informational purposes only and should not be construed as professional or legal advice.

Published with permission from RISMedia.

Published with permission from RISMedia.

An adjustable-rate mortgage (ARM) starts out with a low interest rate for a set amount of time before periodically adjusting based on market conditions, making it an attractive option for borrowers who dont plan to stay in their home for a long period of time. Borrowers in this situation can lock in a low interest rate for the first several years and then move to another home before having to worry about the rate adjusting and their monthly payments skyrocketing.

But those who plan to stay in their home for an extended period of time often experience a shock when their interest rates reset”and their monthly payments jump. If you have an ARM, and affording your new monthly payments will be a stretch as the interest rate begins to fluctuate, you have options when it comes to refinancing your mortgage.

How an Adjustable-Rate Mortgage Works
An ARM has an adjustment period that refers to how frequently the rate will change. For example, with a one-year ARM, the interest rate will adjust once per year after the initial low interest rate expires. Lenders refer to several indexes to set their interest rates when ARMs adjust. Ask your lender which index it uses to set rates, and pay attention to how that index fluctuates over time. Your loan servicer should send you an estimate of what your new payment amount will be after the rate adjustment several months before the change occurs.

What to Do If You Cant Afford Your New Mortgage Payments
If higher monthly payments would leave you struggling to cover your mortgage and other bills, you might be able to refinance your loan. You could choose a fixed-rate mortgage or a hybrid ARM with a low introductory rate that would adjust later.

You might also be able to switch to a fixed-rate mortgage with a longer repayment period than your initial loan, which could give you lower monthly payments than you would have at the new rate with your ARM. If you decided to take out a 40-year fixed-rate mortgage, the interest rate would likely be a little higher than it would be with a 30-year fixed loan.

Another option is to take out a home equity loan, or second mortgage. Doing so could allow you to lower your interest rate and possibly shorten the term of the loan with little effect on your monthly payments.

Stay Calm and Explore Your Options
If your interest rate on an adjustable-rate mortgage has risen and your mortgage payments have jumped significantly, you may be feeling shocked and overwhelmed, but you have options that can help you avoid stretching your budget too thin. While working closely with your lender is critical when it comes to choosing the best mortgage for your situation, its also important to understand how an adjustable-rate mortgage works, and how and when the interest rate will reset.

This article is intended for informational purposes only and should not be construed as professional or legal advice.

Published with permission from RISMedia.

These four iconic destinations embrace outdoor living with serious style.

Bali, Indonesia

An abundance of greenery and teak furniture beside your pool or water feature will create a lush jungle oasis in your backyard.

Santorini, Greece

Introduce a rustic appeal with vibrant blue and white patterned textiles and a wooden pergola for your own slice of Greek paradise.

Cabo San Lucas, Mexico

Combine tropical and desert plantings, like cacti and palm trees, with hammocks and Acapulco chairs to create a breezy vibe where you can laze the day away.

Paris, France

Embrace the elegance of wrought-iron furniture and antique gaslight lanterns to illuminate evenings spent enjoying wine on the terrace.

Published with permission from RISMedia.

Germany leads the world in energy efficiency, followed by Italy, Japan, France and the United Kingdom, according to an international scorecard. The United States is tied for eighth with South Korea.

What are other countries doing so much better than the U.S.? Can the big steps that Germany, for example, is taking to be more green be broken down for individuals to do?

The 2016 International Energy Efficiency Scorecard from the nonprofit American Council for an Energy-Efficient Economy, or ACEEE, looked at performance in buildings, industry, transportation and overall national energy efficiency efforts.

Those are broad areas and apply to entire countries. But there are plenty of small things that an individual or a family can do to save energy that are more widely used around the globe. Here are a few:

Build better: If youre adding on to your home or remodeling, consider green building materials that will make your home more energy efficient. Forty percent of all energy is consumed in buildings, and most of that is used for heating.

Buy green: When choosing a refrigerator or freezer, pay a little more money upfront if you have to for the one thats more energy efficient. Products with the Energy Star certification clearly make it easy to see how much energy something uses and how much it costs per year to power it. Look for the most energy efficient product you can when shopping, such as light bulbs and consumer electronics.

Ride a bike: Germany has extensive bicycle transportation networks, with more than 200 long-distance bicycle paths. Riding a bike to work every day may be difficult, but try riding on errands a few miles from home to see if it improves your health and lowers the gas bill for your car.

Take public transportation: The German public transportation system is so large that 88 percent of Germans live near a bus or train stop. Share your car or take the bus to work and save money and help the environment.

Recycle: If your citys garbage collector doesnt have a recycling program, ask for one. Germany has a complicated recycling system where items must be sorted and recycled properly. Recycling helps reduce pollution, conserve resources and save energy. For example, about 95 percent of the energy used to produce an aluminum can from virgin materials can be saved by using recycled aluminum instead.

Published with permission from RISMedia.