Should I Pay Off My Second Mortgage or My Credit Cards First?

When choosing between bad options, choose the one that harms you least.

I Could Lose My Home

Your second mortgage, if you get into financial trouble, could cost you your house. Your credit cards, no matter how bad your finances get, can't put you out on the street, though they can wreck your credit rating if you go too long without paying them.

My Credit Card Bills Are Higher Than My Mortgage

If you're paying more on credit cards than you are on the second mortgage each month, it's worth it to trim the fat off of your expenses and run that credit card bill down to nothing--then retire the card. Debt consolidations may be worth exploring in this instance.

Bottom Line

Unless your mortgage is "upside down," where the total debt owed exceeds the value of your home, you are almost always better off paying off the second mortgage ahead of paying off the credit cards if you have to make a choice between the two. If you are capable of paying both debts off, put extra money toward paying off the one with the highest interest rate.