Second Mortgage • 10.18.09
What is a second mortgage? A second mortgage is a loan guaranteed under which the borrower provides some form of business (eg property, vehicle) as collateral for the loan. This is possible because a property may have more loans on it. First mortgage is a mortgage that was registered with the first county or city registry. Mortgage that was registered after the first is referred to as a second mortgage. Second mortgage is often referred to as a subordinated loan. This is because the first mortgage has priority over the second mortgage if the borrower defaults. First mortgage will be paid first, and only after the second will be paid. This is the second reason mortgages always comes with higher interest rates.
People take out second mortgage for variety of reasons including debt repayment, medical bills payment, financing the education costs, home renovation, buying another home and creating a home equity line of credit. Second mortgage is also referred to as Home Equity Loan. (more…)
