What Is A Second Mortgage Loan????

Home Equity Loan

Ranch style home

A second mortgage typically refers to a secured loan (or mortgage) that is  referred to as a home equity . Second mortgages are subordinate because, if the loan goes into default, the first mortgage gets paid off first before the second mortgage.   A second mortgage simply means a loan that is secured by the equity in your home. When you obtain a second mortgage loan the lender will place a lien on your house. This lien will be recorded in 2nd position after your primary or 1st mortgage lender's lien, hence the term second mortgage.

There is no difference between a home equity loan and a second mortgage. These are just two different terms for the same subject.A second mortgage can either be a fixed-rate loan or an adjustable-rate credit line. Interest rates and loan program terms will vary from lender to lender so it is important to shop around and compare before committing to any one offer.The term length of a second mortgage varies. Terms can last up to 30 years on second mortgages, though repayment may be required in as little as one year depending on the loan structure.

Loan proceeds from a second mortgage loan can be used for just about anything. Many consumers take out 2nd mortgage loans to consolidate debt, do home improvements or pay for their kids college education. Whatever you decide to do with your loan proceeds it is important to remember that if you default on your payment you can lose your home so you will want to make sure that you are taking the loan out for a worthwhile purpose.

Another plus of a second mortgage loan is that the interest you pay back on the loan may be tax deductible. Consult your tax advisor regarding your personal situation but in most cases the interest is 100% fully deductible as long as the combined loan to value of your 1st and 2nd mortgage do not exceed the value of your home.

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