What is a Second Mortgage
A second mortgage is a mortgage on real estate that has already been used as collateral against another mortgage (the first mortgage). Second mortgages typically have rights to the same real estate but those rights are subordinate to the rights of the primary or first mortgage. The amount of financing through a second mortgage is typically the difference between the total estimated value of the real estate minus the first mortgage. Like all mortgages, lenders will also consider your cash flow to ensure that you can afford to make their interest and principal payments on top of your other mortgage payment commitments
Like standard mortgages, second mortgages can have varying terms, ranging from a year up to 30 years depending upon your personal situation. Second mortgage rates and costs tend to be similar to other mortgage rates and costs although sometimes second mortgages are more expensive to reduce the risk lenders are taking by being subordinate to the primary lender.
Second Mortgages are popular for:
- Consolidation of non-tax deductable debt such as credit card bills and auto payments into a single tax-deductable payment
- Avoiding PMI charges.
- Establishing a home equity line of credit (HELOC).
- For more information about our second mortgage financing solutions, contact one of our loan officers.