Second mortgages are loans taken out on property that is already being used as collateral for a home loan. These loans can be in the form of a home equity loan, or home equity line of credit.

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Second Mortgage

Related Terms: Home Equity Loan, Home Equity Conversion Mortgage, Home Equity Line of Credit
A second mortgage is one that is placed on a property that is already being used as collateral for a different mortgage. Just like your original home loan, the second mortgage is secured by your home, and is used to repay the loan in the event of default. 
Second Mortgage
Borrowers choose to take out a second mortgage on their home for different reasons. You could use it to consolidate debts of high interest into one mortgage loan with a much lower rate, or to avoid paying private mortgage insurance on your first mortgage. You also have the option to borrow cash against the equity on your home to make renovations or pay large bills.

There are two types of second mortgages, a home equity loan or a home equity line of credit (HELOC). The first type loans you a large sum of money up front. You make regular payments with a fixed interest rate to repay the loan, according to the mortgage terms. The HELOC, on the other hand, usually has an adjustable interest rate, and similar to a credit card, lets you borrow money as you need it.

Second mortgages involve the same amount of work as the first one, including home appraisals, disclosures, paperwork, and a number of fees. It is not necessary for the second mortgage to come from the same lender, either; you have the option to go with a different mortgage provider. So you will have to shop for mortgages the way you did before, in order to get the best deal.