Some years ago, I needed funds for several major home improvements and a profitable real estate investment. As a seasoned real estate investor, I knew that my best funding source was beneath my own roof. Accordingly, I sought secondary financing on my primary residence.

Luckily, I knew the importance of considering only lenders that offered the lowest second mortgage rates. My thoughts first turned to my credit union and other local banks. I decided not to let loyalty distort my judgment, however. After all, my home was at stake. I wanted to make capital improvements – not worsen matters.

After soliciting some objective advice, I applied a two-pronged analytical approach to the matter.

First, I calculated the highest monthly payment I could afford for a new loan. Part of the loan proceeds were earmarked for investment property acquisition. I factored this into my affordability analysis.

My next step was to research the realistic total cost of all planned improvements. In the process, I obtained several bids from local contractors and construction material suppliers. Despite the offer of a $10,000 open line of credit from one prospective lender, I did not want to get in over my head by borrowing more than I really needed.

What are current mortgage rates?

Online search engines offer your best odds of locating the lowest second mortgage rates. Mortgage lending is a competitive industry and lender marketing objectives change frequently. Moreover, global financial dynamics with tremendous direct impact on interest rates fluctuate daily. Applicant-specific characteristics such as credit scores and loan-to-value ratios also affect loan interest rates.

“Little” things add up

When it comes to mortgages, little things can mean a lot. Very slight interest rate variations or as little as two extra years to repay your loan can make the difference between getting that new roof – or watching your old one slowly sink in. Therefore, you are well-advised to invest the time and effort required to ascertain an accurate answer to the question, “What are current mortgage rates?”

In closing

Closing costs are also an important consideration. I eventually pared my own list of prospective lenders down to two contenders. Their respective closing costs clinched my decision. One firm offered a fixed-rate installment loan that would have netted me only $10,000 after closing costs. The other lender offered a variable-rate revolving credit line with no closing costs and a $14,000 initial advance. Which one would you do business with?