Just a short time ago, the economic future looked bright. Unemployment was at an all-time low, the stock market was at an all-time high, and most Americans felt secure in their jobs. Then COVID-19 struck. Now the economy is in freefall. The stock market has tanked, and tens of millions of hardworking Americans find themselves unemployed or furloughed. Their savings are dwindling rapidly as the bills mount. If you find yourself in this situation, you may be considering getting a second mortgage on your home to help you survive these tough times. It’s a big step though, and you need to carefully weigh the options before deciding whether a second mortgage is right for you.

How does a second mortgage work?

Second mortgages are loans taken out on property that is already mortgaged. Just like a first mortgage, the property is used as collateral.


They are called second mortgages because if the borrower defaults, the lender holding the first mortgage gets paid before the lender holding the second mortgage. Because of that, the second lienholder is in a riskier position when it comes to getting repaid and customarily charges a higher rate of interest to offset the added risk.


Interested in Getting A Second Mortgage? Consider All The Options First



Second mortgage. You receive a one-time lump sum of money that must be repaid with interest concurrently with your first mortgage for 5 to 30 years. Interest rates are generally fixed, which means your payments stay the same for the life of the loan. There may be upfront fees, and your home is the collateral.


Home equity line of credit (HELOC). With a HELOC, the lender makes a sum of money available that you can draw on as you need it much like a credit card. This draw period usually lasts 10 years. During that time you make payments, usually less than those associated with a second mortgage.


After the draw period, you must begin repaying the loan with monthly payments (principal + interest) for a period of up to 20 years. Interest rates are variable, which means your payments can go up or down.


Some lenders require borrowers to repay their loans in full immediately after the draw period with no opportunity to make monthly payments. As with the home equity loan, your home is the collateral for the HELOC.

What qualifications do you need to get a second mortgage?

The qualifications are similar to a first mortgage. You must show proof of income, established work history and a good financial history. A debt to income ratio higher than 43% probably won’t be accepted. Many lenders require a credit score of 680, but the more equity you have in your home, the more likely the lender will be to work with you.


Your W-2s and recent paycheck stubs will be reviewed along with your federal income tax returns. Your home will be appraised to determine its current market value. The approval and the terms of the loan (including the rate of interest) will be based on the information you give the lender.

Disadvantages of getting a second mortgage

  • You are using your home as collateral
  • If you default on your mortgage, the lender can foreclose on the house
  • If the foreclosure goes through you will lose your house and your credit will be ruined
  • You need a good credit score
  • Your debt to income ratio must not be above a certain level
  • You need a stable work history
  • Your taxes must be up to date
  • You are adding debt that can take up to 30 years to pay off

There is a home equity loan alternative you should consider.

Sale and Leaseback

The sale and leaseback option is one in which you sell your home to a third party and then lease it back for a period of time, typically 2 years.


There are a number of advantages to this alternative for many homeowners.


  • You get cash fast
  • A low credit score won’t disqualify you
  • A high debt to income ratio won’t disqualify you
  • Tax liens won’t disqualify you
  • You can qualify if you are unemployed, underemployed, or self-employed
  • You eliminate sky high mortgage payments
  • Your credit can’t be ruined by a foreclosure

What makes the Skydan Equity Program the best alternative to home refinancing in Chicago?

If you’ve been turned down for a second mortgage because of credit issues, tax issues, or job loss, Skydan is the best alternative to home refinancing in Chicago area. We don’t base our response to your need for cash on your credit, your job history, or any problems you might have with the IRS.


We are not bankers or lenders. Skydan Equity Partners is a real estate investment company dedicated to helping homeowners get the financial relief they need without increasing their debt or incurring monthly payments. Unlike second mortgages or HELOCs, Skydan’s sale and leaseback program doesn’t charge interest or make qualification determinations based on your FICO score, your employment history, or your relationship with the IRS.


Our process is simple and easy.


  1. We review your application quickly
  2. We set up an appointment to visit your home in just 3 – 5 days
  3. We determine how much cash you qualify for within 10 days
  4. We put up to $250,000 in your hands in 30 days or sooner (actual amount is determined by property value).


Advantages of the Skydan Equity Program

  • You stay in your home
  • No monthly payments (payments are deferred for up to 2 years)
  • Zero interest
  • No added debt
  • No credit check


At the end of the agreement, you have 2 options.


  1. You can buy your house back from Skydan (original purchase price plus the deferred payments).
  2. You can sell the house and keep any profit (over and above what you owe Skydan).


If you have equity in your home, you can make it work for you without incurring more debt and decades of monthly payments. Call us today. We won’t check your credit, review your tax returns, or turn you down because of your debt level. We will give you the peace of mind and the time you need to regain your financial footing and get back on track.


Serving the following Illinois communities since 2004:

DuPage County

Lake County

Kane County

Kendall County

Will County

Cook County