What are Second Mortgage Loans?
A second mortgage is a loan that is secured by your home’s equity, and it is independent of your first mortgage which remains intact. Since a second mortgage uses your home as collateral, you want to remain current with your loan payments to prevent the loss of your house. The money from a second mortgage is typically given in a lump sum, but it can also be distributed as a line of credit. The popularity of second mortgages is growing because: • You can consolidate credit card or consumer debt into one monthly payment and save money that would have gone to paying interest. • You can use the money for large purchases or home improvements which will increase your home’s equity and market value. • You generally pay lower interest on second mortgages. • You can deduct second mortgage interest on your annual taxes.
