What Is Second Mortage

A house property in America is the best way to generate money. One property can use as a security for the loan but not only for one loan but also for many open loans or liens. When a home purchase which is called primary mortgage or first mortgage loan. After taking the first mortgage loan the homeowner can also apply for another loan or lien which is called Second mortgage loan. The second mortgage is a secured loan against the same property secured for the first mortgage where the property used as collateral. Let’s understand the term Second Mortgage.

What Is Second Mortage

The term “second” is indicating that this loan has not priority to pay off when you default the loan whereas the primary loan has the priority to pay off at first and the second mortgage is registered after the first mortgage or first position trust deed that is why it is called second mortgage. So for this high risk reason the lenders are charging high interest rate for this second mortgage loan than the first mortgage lien.
Normally the second mortgage is treated as a traditional home equity loan in the lender’s point of view but it is a legal instrument where it is define as the second position trust deed for the borrower. If the homeowner stops making payment to the second mortgage but, the homeowner can foreclose, even he is making payment to the first mortgage and may lose his home.
Generally the lenders are very tightly approving for a second mortgage after significantly assuring the borrower’s home equity in first mortgage, high credit score and good debt-to-income ratio. Nowadays the borrowers may call his first mortgage lender or the new lender to borrow the second mortgage loan with the help of online application from.