What are Second Mortgages?
A home may have multiple mortgages on it. Second mortgages are subordinate, meaning that in the event of default, the primary, or first mortgage would get paid off first, and then any funds remaining would be used to pay off any second mortgages. For this reason, second mortgages typically carry a higher rate of interest. Also, like first mortgages, second mortgages also carry closing costs and “points” that may make the total cost of the second mortgage more expensive. In the most common type of second mortgage, a homeowner may borrow up to the amount of equity he or she has in the home. For example, if the owner has a home valued at $100,000 and currently owes $75,000 on the first mortgage, a second could be taken out for $25,000. Because this type of second is still 100 percent secured by equity, it is the easiest type of second mortgage to get, and will not be as expensive as other second mortgages that are not fully secured. There are actually several types of second mortgages. A
Second mortgages used to carry a stigma — they were a sign that you were in financial trouble. But today, the ability to borrow money against your property is considered one of the biggest advantages of owning a home. Second mortgages are essentially loans secured by your home or another piece of property with a first mortgage. The second mortgage allows the homeowner to tap into his or her equity to pay for college tuition, finance essential home improvements, pay off credit card balances, or meet other pressing financial needs. Because there is more risk involved with a second mortgage, the lender’s conditions are usually more stringent. The term is shorter, and the interest rate is higher than for a first mortgage. In the event of default, the holder of the second mortgage is subordinate to the first. To qualify for a second mortgage, your credit must be in good standing, and you must be able to document your income. An appraisal will be required on your home to determine the home’s
A second mortgage is a loan made against your home when you already own a primary mortgage. The home equity is used as collateral for the second mortgage loan. Your second mortgage has less priority in comparison to the first on the identical property. So if you default you will want to clear • Second Mortgage Lenders • There are a number of Second Mortgage Lenders, some better than others which we will cover in this article. If you are unsure what a Second Mortgage is, see our other article which covers Second Mortgages in depth. With a second home loan, you get the chance to borrow a fairly large sum of money. Moreover, • Refinance Rates • Home mortgage Refinance rates are constantly changing, so here is the current refinance rates as of 3rd November 2008. Sorry if the table isn’t 100% but it’s a bit hard to format, but it should be readable enough: Loan Type Today +/- This week 30 Yr Fixed Refi • About Home Equity Loans • Depending on the market, and the terms of the original mortga
Sometimes known as “secured loans” or “home equity loans”, second mortgages are mortgage loans that are secured on a property which already has a first mortgage on it. For example, if your home is worth £150,000 and you owe £80,000 on your existing [first] mortgage, you would be eligible to take a second mortgage based on the equity in your home – the difference between its value and what you owe on your mortgage. Why Would I Want A Second Mortgage? Second mortgages are ideal for a range of purposes: • Buying a second home • Funding a business startup • Renovating or extending your existing home • Consolidating your existing debts in a single, cheaper loan Be careful, though – second mortgages are seen as higher risk by lenders, and consequently usually have higher rates of interest than first mortgages. In some circumstances – depending on what you want the money for – it can be cheaper to remortgage than to take a second mortgage. That way, you retain the benefit of the lower interes
You might well be familiar with a regular primary mortgage but yet unsure of what exactly a second mortgage implies. A second mortgage is just yet another mortgage on your home. It is a loan that has been secured against your property. Here the term second is used to imply that the loan does not have a first priority on your home in the event that you default. Instead, your first mortgage will have the priority and would thus be paid out before any of the funds can go towards paying out the second mortgage.
