Category: Mortgage

pay off mortgage or invest

Should You Pay Off Your Mortgage or Invest Your Money?

Having a nest egg of savings gives you peace of mind. Whether you’ve worked hard to save more than you spend or recently obtained an inheritance, it can be tough deciding what to do with your money. Should you pay off your mortgage or invest your money?

Our team of mortgage brokers in Tucson at Priority Lending LLC can answer your questions about whether to pay off your mortgage or invest the money. Call us at 520-531-1119 to learn more, and keep reading to know the benefits of each decision and what factors you should keep in mind.

Paying Your Mortgage Early

Your mortgage loan likely has monthly payments that you pay off over the loan term. However, if you have enough money saved, you can pay in advance. Here are some of the pros and cons of paying your mortgage ahead of time.


  • Low risk: There’s no risk in paying your mortgage off early. If you were to invest that money instead, investment returns vary, and there’s no guarantee that your investments would make a profit.
  • Less debt: Paying off your home in full means that you’ll have less debt, helping you reach your financial goals. 
  • Smaller interest payments: The more you chip into your mortgage, the less you’ll have to pay in interest.
  • You own home equity: Home equity access increases when you pay off your mortgage.

However, choosing to pay off your mortgage over investing may lead to prepayment penalties. Your portfolio will also be less diverse, and you won’t benefit from a home tax deduction.

Investing Your Money

When deciding whether to pay off a mortgage or invest, you’ll want to be familiar with how investing your money works. Here are some of the benefits of this strategy:


  • Higher risk means higher potential reward: Investing in the stock market can yield greater returns than what you would save on your mortgage interest. 
  • Tax benefits: If you invest in certain types of retirement accounts, you can reap great tax savings.
  • Employer match: If your employer offers a sponsored retirement account like a 401(k), they might match your contributions.
  • Access to liquid assets: If you find yourself needing cash, selling your investments is much easier than selling your home.

Be aware that there are no guarantees with investing. If the stock market is strong, you may make money, but you could also lose money during bad economic conditions. Consider your risk tolerance, and act accordingly.

Important Factors to Consider

Before deciding whether to pay off your mortgage or invest, make sure you have an emergency fund, regular retirement contributions, and have paid off high-interest loans. Investing or paying your mortgage off in full before taking these steps is not the best financial move.

Learn More About Mortgages

For over 25 years, our team at Priority Lending LLC has provided Tucson homeowners with quality mortgages. Our experienced professionals know whether you should pay off a mortgage or invest and can answer your questions for you. Learn more about mortgage rates and inflation from our team. Contact us today at 520-531-1119 to learn about your mortgage pre-approval options.

what happens when a second mortgage forecloses

What Happens When a Second Mortgage Forecloses?

We know how devastating it can be when a second mortgage forecloses. Dealing with a single foreclosure is already stressful enough, and now you’ve got a second lender to worry about on top of it all. The possibility of any foreclosure can leave you stressed about your financial situation. 

The trusted mortgage brokers in Tucson have the answers for you when you want to know what happens when a second mortgage forecloses. In this blog post, we will discuss what happens during a second mortgage foreclosure, what happens with your mortgage lender, and details about the foreclosure process.

Second Mortgages 

It’s not uncommon for homeowners to take out a second mortgage alongside the initial mortgage to help cover the purchase of their home. People also take out second mortgages to cover other payment situations such as home improvements, college tuition payments, and debt consolidation. 

What Happens to Second Mortgages in a Foreclosure? 

When you have more than one mortgage out on a property, this means that your property could also be subject to a judgment lien. 

If at any point you fail to make a payment to a lender, then the lender has the right to start a foreclosure. In a foreclosure, lien priority takes place. This means your first lender for your first mortgage gets priority in payment (called a “senior lien”).

A “junior lien” would be your second mortgage lender and any outstanding judgment liens.

The Foreclosure Process

If your first mortgage lender forecloses, any funds from the foreclosure after the lender’s funds have been paid off will go to the junior liens. A lot of people believe that when a first mortgage foreclosure happens, the second mortgage has already been taken care of, but this is not always the case. The second mortgage lender’s debt obligations remain.

This means the second mortgage holder has the right to sue you based on the promissory note you initially signed if they don’t receive enough money from the first lender’s foreclosure. This isn’t an uncommon occurrence because most second-mortgage lenders receive very little from a foreclosure sale.

Avoiding Foreclosure

To answer the initial question, what happens when a second mortgage forecloses? The debt doesn’t go away. Since you signed the promissory note at the beginning of the deal, you must pay them what you owe. If they don’t get enough money from the initial foreclosure and you don’t pay them back, they have the right and opportunity to sue. 

The best way you can avoid all of this is by being properly prepared. Stay on top of your mortgage payments, however many you have, and pay what you owe. If you don’t, you run the risk of not only being foreclosed from your home property but also being sued in addition.

Contact a Mortgage Lender in Tucson, AZ

For more information about finances with mortgage debt or loans, what happens when a second mortgage forecloses, foreclosure sales, or what happens to your mortgage if the housing market crashes, contact us today at Priority Lending. Call us at 520-531-1119 or contact us online to reach a loan officer.

mortgage rates and inflation

Understanding the Relationship Between Mortgage Rates and Inflation

Many homeowners and potential buyers or sellers watch the housing market with interest, gauging the best time to act so they can benefit from the best possible mortgage rates. With inflation rising around the country, mortgage rates may suffer some side effects. Learn about the relationship between mortgage rates and inflation from the best mortgage brokers in Tucson, AZ.

What Is Inflation?

Inflation is a consistent rise in the prices of goods and services in a short time, often over weeks or months. While all consumer prices may increase due to shortages, supply and demand, or other factors, inflation shows itself by quickly outstripping worker wages. Everyone feels the impact of inflation, with many people slowing down or stopping discretionary spending.

Types of Inflation

Different circumstances cause inflation, usually falling into one of these three types:

  • Supply Side Inflation: When the supply of goods and services slows down
  • Demand Side Inflation: When increased demand causes prices to rise
  • Inflation Spiral: When shortages or high demand cause panic-buying and inflated prices

What Is the Relationship Between Mortgage Rates and Inflation?

Mortgage rates don’t feel a direct hit from inflation rates but tend to rise with increases in Federal Reserve requirements. The Federal Reserve controls the rate at which banks can borrow money from each other, which trickles down to banks changing the rate at which consumers can get loans. When inflation rises, mortgage interest rates follow suit because the banks need a higher interest rate to match theirs, resulting in higher monthly payments.

FAQs (Frequently Asked Questions) About Mortgage Rates and Inflation

Common questions homeowners, buyers, or sellers have about the relationship between mortgage rates and inflation include the following:

Can inflation affect my current home loan?

Homeowners with a fixed-rate mortgage can rest easy during inflation because their purchase contract stipulates a mortgage rate throughout the remainder of their loan. Adjustable-rate mortgages, or ARMs, don’t have this protection, so homeowners may pay more with their monthly payments as mortgage interest rates rise. If you have an ARM, check into the potential of refinancing into a fixed-rate mortgage before rates increase.

How does inflation affect home prices and sales?

Like the value of everything from food to clothing, home prices soar during inflation. However, these higher prices usually decrease interest from potential buyers, leading to fewer home purchases. Sellers may have to accept lower home bids and work harder to find potential buyers.

How can a potential homebuyer get the best interest rate?

Regardless of inflation, you can still get a great interest rate on your mortgage. Some tips for a better interest rate include:

  • Avoiding new debt
  • Maintaining a healthy credit score
  • Increasing the size of your down payment
  • Choosing a fixed-rate mortgage instead of an ARM

Get Pre-Approved for a Fixed-Rate Mortgage Today

Start your home search with a mortgage company that understands the relationship between mortgage rates and inflation. Priority Lending LLC in Tucson, AZ, has helped homeowners get the best mortgage interest rates for over 25 years. Call (520) 531-1119 for your free consultation today.

Looking to invest in business properties? Learn more about commercial real estate.

Second Mortgages

Second Mortgages2020 was a financially sound year for homeowners since the home equity has an average gain of $26,300 last year. According to Corelogic, an average homeowner has more than $200,000 in equity.

The pandemic brings in unprecedented financial difficulties, during which time you may need access to a large amount of money. Consider tapping into the equity and take out a second mortgage.

This article walks you through the inside workings of second mortgages, closing costs, interest rates, pros and cons, qualifications, requirements, the application process, and much more.

How Does a Second Mortgage Work?

The second mortgage is a loan similar to the one used to purchase your home. The reason it’s called a 2nd mortgage is that it is next in line to be repaid after your purchase loan.

Since it uses your home as collateral, the second mortgage lender can repossess your home if you fail to repay. In that case, the loan used to purchase your home is the first one to be repaid. The remaining, if any, will go towards the second mortgage.

Second mortgages tap into your home’s equity, which is the current market value of your home minus the loan balance. In most cases, lenders would let you borrow 85% of the home equity, depending on your credit score.

And, since the second mortgage loan is taken against your home, it has a lesser interest rate than other loans such as personal loans or credit cards. Depending on your choice of loan, it can either be a fixed rate or variable rate.

Types of Second Mortgages

The common types of second mortgages are:

  • Home Loans: The lender gives you a lump sum where you get the entirety of the loan amount to use as you wish. The loan is then repaid in fixed monthly payments. Generally, they come with a fixed interest rate and a fixed term.
  • Equity Lines of Credit: The lender gives you a line of credit from where you draw a certain amount of money as and when you wish, just like a credit card. Line of credit usually comes with adjustable rates.

Since they are secured against your home, they are cheaper than most loans but not as much as the first mortgage.

Is a 2nd Mortgage a Good Idea?

Second mortgages can be a great source of money when you require a lump sum at a reasonable rate of interest. They are a good idea when used for things that have long-term value.

Most people take out a second mortgage for things that have a long-term value, such as:

  • Home Improvements – You can proceed with home improvements such as a kitchen remodel or bathroom renovation, etc.
  • Debt Consolidation – The loan gives you the chance to pay off high-interest loans such as student loans, credit cards, etc.

However, it is not advisable to use it for inconsequential things that do not add value.

Closing Costs on Second Mortgages

As with the primary mortgage, the second mortgage also has closing costs, though reasonably reduced. Even then, it amounts to 5-6% of the loan amount.

For loans up to $200,000, the lenders charge a “flag” title insurance policy with a flat fee of $125 and a sub-escrow fee which is $225 -$250.

Additionally, the standard fees such as the recording fees, notary fees, and the payoff fees amount to $60-$150. And then, there are the administrative fees charged by the lenders that come to $250.

Apart from that, you may have to pay an additional cost of $300 – $400 if an appraisal is required. Finally, the credit fees come to $15 – $30.

How Much Home Equity Do You Need for a Second Mortgage?

Though equity requirements vary, second mortgage lenders prefer that you have a 15% – 20% equity in your home.

You can borrow up to 85% of the home’s equity, which is 85% of your home’s value – any loan balances. For example, consider your home’s worth to be $300,000 and loan balance $200,000.

85% of $300,000 = $240,000.

2nd mortgage would be $240,000 – $200,000 = $40,000.

Does a Second Mortgage Have Any Tax Benefits?

The tax benefits primarily depend on the kind of debt.

When your second mortgage is used to buy, build or improve a primary/second home, it becomes a home acquisition loan. If the home acquisition debt and the home equity debt combined together come up to $1.1 million, you could deduct all your interest in that particular year.

However, if the home acquisition loan is $2,000,000, you’ll be able to deduct only half of the total interest paid that year.

Can You Get a Second Mortgage to Buy Another House?

Yes! You can use a second mortgage to buy another house. Tapping into the home equity allows you to enjoy better rates of interest and tap into the financial resources that lay untouched otherwise.

If your second home is an investment property, home equity is often the least expensive option since they have lower interest rates.

Are Second Mortgage Rates Higher than First Mortgage Rates?

Second mortgages have higher interest rates than the first mortgage. This poses a risk to the lenders since they are second-in-line to be paid in case of foreclosure.

However, a second mortgage has lower interest rates than other unsecured loans such as personal loans and credit cards.

How Much Does It Cost to Get a Second Mortgage?

Second mortgages cost 2%-5% of the mortgage amount both in upfront costs and those that are paid over a period of time. Most of these are similar to that of the primary mortgage but are paid separately since they are considered to be separate loans.

Pros and Cons of Second Mortgages

Second mortgages, as with every other loan, come with their own pros and cons. Talk with your lender and consider the risks to make sure the second mortgage loan is the right one for you.

Pros of a Second Mortgage

Lump-Sum: Second mortgages allow you to borrow a significant amount of money. Since the loan is secured by your home, you would be able to borrow much more than unsecured loans.

Lower Interest Rate: Second mortgages have lower interest rates than other loans since they use real estate as collateral which reduces the risk to the lender.

Tax Benefits: In certain cases, the interest accrued will be eligible for tax benefits. According to the Tax Cuts and Jobs Act, you’ll be able to claim deductions if used for home improvements.

No Limits: Second mortgages give you the freedom to use the mortgage amount as you wish. You can use it for big purchases you wouldn’t be able to afford otherwise.

Cons of a Second Mortgage

Risk of Foreclosure: Since the loan uses your home as collateral, you run the risk of foreclosure if you fail to pay it back.

Closing Costs: Second mortgages can be expensive, much like your primary mortgage. The closing costs can end up in thousands of dollars in origination fees, appraisals, credit checks, and more.

Interest Rate: Though the rate of interest is much lesser than your credit card, it is higher than your purchase loan.

Undue Pressure on Your Budget: A second mortgage adds to your debt burden even with your low-interest rate. It can place pressure on your budget, especially if you are living paycheck to paycheck.

Requirements for Second Mortgage

To qualify for a second mortgage in the form of a home equity loan or HELOC, you’ll need:

  • A credit score of 620
  • A debt-to-income ratio of 43%
  • A decent amount of equity

Below is the paperwork your lender will require before closing the loan:

  • Copy of the deed to the property
  • Tax appraisal
  • W-2 (last 2 years)
  • Tax returns (last 2 years)
  • Paystub (current)
  • Proof of income (child alimony, disability payments, child support, lawsuit settlement, inheritance, and other sources of income)
  • Copies of bank statements (3-6 months)
  • Open credit accounts
  • Current loan statement
  • Homeowners insurance

Apply for a Second Mortgage

In terms of getting a second mortgage, the application process is similar to a primary mortgage; you do not need any home appraisal or inspection. However, you may need an assessment to determine the current value of your home.

To start with, talk with your lender to check if you are eligible for other financing options, including refinancing.

Here’s the application process for the second mortgage.

  • Calculate the equity in your home and how much you can borrow.
  • Gather all the required documentation, preferably in digital format, to speed up the timeline.
  • Shop around different lenders for better rates. Compare the lenders and financing options for your situation.
  • Once you finalize the lender, make sure you fill out the application with the correct details, or it may delay the approval.
  • Fax or email the documentation to save time and expedite the process.
  • Letting the lender know the reason for the loan may help with the approval process.
  • Your lender may want to conduct an appraisal and inspection if it hasn’t been done in the last six months.
  • Review the disclosure documents and verify the payment terms.
  • Ensure that the terms of the loan match with what you have agreed to.

Piggyback Loans

Second Mortgages - Piggyback LoansPiggyback loans — also known as 80-10-10 loans — are an entirely different kind of second mortgage. Rather than borrowing against your home equity, you get a loan piggybacking the primary mortgage. In short, you’d be using two mortgages to purchase your home. The first mortgage typically covers 80% of the home price, and the second mortgage covers 10%. The remaining 10% is covered by your down payment.

It is generally used to cover parts of the down payment and avoid private mortgage insurance (PMI), as well as avoid taking a jumbo loan where the interest rates are significantly higher.

First Mortgage vs. Second Mortgage

Similar to a first mortgage, a second mortgage is also taken with your home as collateral.

The first mortgage is the primary loan that you take to purchase your home. The interest rates are significantly lower than many other loans. Additionally, they are also tax-deductible. However, the closing costs may be high and needs to be paid upfront.

The drawback is that you do not possess the ownership of the property until you pay back the loan. And defaulting on the monthly payment can lead to foreclosure, with the primary mortgage being paid first.

On the other hand, the second mortgage is taken on the home equity in addition to the primary mortgage. The rate of interest is high when compared to first but lower than the unsecured loans.

Second Mortgage vs. Home Equity Loan

Home equity loans are pretty similar to second mortgages that many confuse between the two. They are alike in every aspect, including that they use home equity to finance the loans. You’ll need to retain 20% home equity to qualify for both these loans.

The rate of interest is fixed so are the payment terms. You make a monthly payment, failing which you will face foreclosure. A home equity loan is available in a lump sum similar to the second mortgage.

Second Mortgage vs. Home Equity Line of Credit

Second Mortgages Versus Home Equity Lines of Credit (HELOC)A home equity line of credit (HELOC) is also quite similar to a second mortgage in that it is financed by home equity. It has a revolving credit line from where you can borrow money and then make monthly payments, just like your credit card.

A HELOC also has a draw period, say ten years, where you can borrow money. After the draw period comes the repayment period, during which time you have to pay it off. Once you have paid it back, you can use the money on your credit line repeatedly without applying for more home equity lines of credit.

Like the second mortgage and the home equity loan, your home is at risk of foreclosure if you miss monthly payments.


By taking out a second mortgage, you tap into the home equity to finance your home improvements, big purchases, and such. While it has its risks, the lower interest is an attraction.

You can use a second mortgage to make substantial improvements to your home, settle debts on loans that carry a higher interest rate. Like the purchase loan, it is taken against the real estate, which means that the first mortgages have priority when the borrower defaults.

You need not take out a second mortgage from the same lender as your primary loan. Shop around and find the lender who carries the best rates. Also, look around for other loans appropriate for your financial situation.

Priority Lending, LLC has been providing mortgage loans and helping people like you fulfill their dreams since 1997. Contact one of our loan officers today to get started on refinancing your mortgage.

What Is the Best Mortgage?

So what is the best mortgage? There are different types of home loans available for people looking to move into a new home. There are two main types of fixed-rate mortgages and adjustable-rate mortgages. Fixed-rate mortgages lock in your interest rate. Adjustable-rate mortgages have the possibility of increasing your interest paid over time.

If you’re looking for a new house, you will need to get a mortgage for the new property you plan on moving into. There are several types available to individuals. Applicants who meet specific criteria and requirements can apply for mortgages. One mortgage type may be suitable for someone. On the other hand, that doesn’t mean that the same mortgage set-up will work for you. For example, let’s look at variables such as:
  • Income
  • Marital status
  • Debt
  • Credit score
These play a huge role in determining whether you get approved for a mortgage.

What Is The Best Mortgage?

It’s essential to become educated about all of the various mortgage options out there so that you can secure your home for a long time to come. You should always consult with your realtor before closing a deal on any home as they will be able to give you advice that relates to your specific situation. Moreover, educating yourself will be time well spent.

However, a few general rules apply regardless of who you are in terms of mortgage configurations. Continue reading to find out about the various mortgage options available and how you can go about choosing the right one for you.

Types of mortgages

In this paragraph, we will look at the types of mortgage available. There are two primary types of home loan options; they are fixed-rate mortgages and adjustable-rate mortgages. Firstly, fixed-rate mortgages lock in your interest rate for life while secondly, adjustable-rate mortgage interest rates can change within any given year from the time that the loan was taken out. It all depends on whether you want to take the brunt of interest upfront. If you slightly delay it a bit, you will still be responsible for paying the higher interest rate if it rises so fixed-rate mortgages tend to be ideal.

Mortgages can be allocated in different lengths; this gives you the ability to choose how long you want to take to pay off your house fully. The most common mortgage lengths are 15yrs, 30yrs, and 50yrs. Keep in mind that the longer you take to pay your home off, the more interest you will pay. With this in mind, let’s look more in-depth.

Choosing the best mortgage for you

Above all, deciding on which mortgage type is right for you really boils down to your current financial situation. If you make an adequate amount of money each year but have some outstanding debts, you may want to go with a fixed-rate mortgage for the long-term. Alternatively, and most importantly, if you make decent money and have no debt obligations, you can opt for an adjustable-rate mortgage at a 15-year term. As a result, it would be beneficial to discuss all of this with your mortgage lender.

People Also Ask

Q: What type of home loan is best?

A: Generally speaking, non-conforming and other conforming mortgage set-ups are best because they require the lowest down payment for qualified first-time buyers.

Q: How do you know which mortgage is right for you?

A: You first need to find out how much house you can afford, by establishing this, you will be able to find the right home loan in no time.

Q: What is the best bank for a home loan?

A: All bans are different; however, some of the best banks to obtain a home loan through are available on request.


By now, you know about all of the various home loan types available. Before making a decision about which one is right for you, ask yourself these two simple questions: “Am I comfortable with the idea of possible paying more interest over time?” and “How fast do I want to pay off my house?”.

Please see our First Time Buyer page if this is going to be your first home purchase.

Investopedia has an awesome article on how to choose the best mortgage.

  • 1
  • 2
Contact Priority Lending

Priority Lending, LLC

8035 N Oracle Rd
Tucson, AZ 85704


Call Today for Your Free Consultation!

Get Pre-Approved Online

Priority Lending LLC Small what logo for footer and header

Copyright © -
Website by CS Design Studios

NMLS 142706 | BK 0910846
Equal Housing Lender