Second Mortgage or 2nd mortgage:
Second Mortgage or 2nd mortgage:
Second mortgage is a secured mortgage loan. It is actually a secondary mortgage against a property. There can be several liens against the same property. A mortgage loan or the first mortgage is the primary lien against a property and the second mortgage is the sub-ordinate lien to the property. The property may have third or forth lien against it. A home equity loan s also called second mortgage.
If a lien holder defaults then he will have to pay the first mortgage or the primary lien first and then the second mortgage or the second lien that is why it is called a second mortgage or 2nd mortgage. Generally the interest rate of the second mortgage is higher than the first mortgage. The length of the second mortgage hugely differs. You can get a 5 year loan or 30 year loan.
As the rate of the second mortgage is way too higher, the result of it can be foreclosure. If the borrower defaults on his or her mortgage payments then the lender of the second mortgage can even foreclose. The lender can buy out the first lien and then foreclose. So before going for a second mortgage, decide whether you can afford it or not and take a look on the pros and cons of the second mortgage.
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