Second Mortgage Guide

A second mortgage is simply another loan that uses your home as collateral. "Second" or 2nd refers to the order in which it must be paid off. You must pay off your first mortgage before your second mortgage. Since this makes a second mortgage riskier to lenders, second mortgages may have higher interest rates than first mortgages of the same loan type.

What Do Homeowners Use A Second Mortage For?

Types Of Second Mortgages

Why Get A Second Mortgage Instead Of Increasing The Amount Of Your First Mortgage?

Who Do You Get Second Mortgages From?

Many of the same mortgage lenders who offer first mortgages also offer second mortgage loans. When a home buyer finances the purchase of a new home with a 1st and 2nd mortgage, it is not uncommon for both the first and second mortgages to be from the same lender. When a second mortgage is added later it is not unusual for it to be from a different lender.

What Are The Risks Of A Second Mortgage?

Borrowers should be cautious when considering increasing their mortgage debt. It poses real risks especially if home values decline. They should carefully consider whether any cash-out is truly in their best interests or whether they have the discipline to manage a HELOC responsibly. Borrowers should be careful to leave sufficient equity in their home to withstand significant housing price declines. A large percentage of homes that went underwater in the housing crisis had second mortgages. An underwater mortgage leaves you with no easy way out. Having a first and a second mortgage with two different lenders may make it much more difficult to get important changes approved, including: