A second mortgage is a loan that is secured by the equity in your home. When you opt for a second mortgage loan, the lender will place a lien on your house. This lien will be recorded in the 2nd position, after your 1st mortgage lender's lien, hence it is called as a second mortgage. A second mortgage is also sometimes referred to as a home equity loan. There is no difference between the two. They are both the same.
A second mortgage can either be a fixed-rate loan or an adjustable-rate credit line. The interest rates and loan terms vary from lender to lender and so you must compare rates offered by different lenders to get the best bargain. Loan proceeds from a second mortgage loan can be used for anything.
Many people take 2nd mortgage loans to consolidate their debts, undertake home improvements, or pay for their kids education. Whatever purpose you take your loan for, you must remember that if you default on your payment you can lose your home. So, make sure that you are taking the loan out for a worthwhile purpose. An advantage of a second mortgage loan is that the interest you pay back on the loan may be tax deductible.
|
