Should You Take Out a Second Mortgage on Your Home?

Financial Advice By: Carmen Rita Wong

Q: Sometimes I feel like I’m one of the lucky ones: I found my dream job about a year ago and am so happy with the work that I’m doing!  Unfortunately, I had to take a pay cut for this position and my money seems to be coming up short every month, no matter how I try to readjust my budget.  I’ve heard other people talking about “refinancing their home” or getting a “second mortgage.”  I’m not sure that I fully understand what either of those mean, but I do own my own home, so do you think either of those would be useful options for me to consider?

I’m thrilled that you’ve found your dream job– so few of us do that it’s nearly worth its weight in gold! But of course, dreams don’t pay the bills. It’s also good news that you are a homeowner, but let’s not go there yet.

Allow me to expand your mind first: Your income doesn’t necessarily have to based only on your full-time salary. Dream jobs plus a family (if you have one) tend to take up most of your life, but if there’s any way that you can carve out the time to find ways to bring in other income, I’d rather you head there than pulling money out of your house, which can be a slippery slope, draining your biggest asset. I don’t know what you do for a living, but there are some great, legitimate ways (stay away from those cheesy work-from-home-get-rich ads) to earn on the side, such as or

And if working more is out of the question, then instead of borrowing from your home’s value–which can be costly not only in interest and fees, but in terms of lowering your own net worth–consider which relationship you want long-term: Do you want a long-term relationship with your career or with your home? When budgets can no longer be slashed, I always advise what feels like some tough love. We can’t have it all. That can mean sometimes considering selling your home instead, using some of your proceeds as a down payment on another, less expensive home, then setting aside some earnings into an emergency fund.

In that way, you maybe can’t have it all, but you can have two very important things: both a dream career and, peace of mind.


Carmen Rita Wong is the President and Founder of Malecon Productions. She is the former co-creator and host of the only national, daily personal finance television show, On the Money, on CNBC. Carmen was also the co-founder and former President of an all-female financial planning firm and is currently Assistant Industry Professor of Finance and Risk Engineering at NYU Polytech.

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