What is a second mortgage?

I am very excited to announce that Residential Mortgage Center now has competitive fixed-rate home equity loans.

So, what is a second mortgage, and how does it work? Your original mortgage covered the purchase of your home. A second mortgage allows you to borrow again, accessing the equity you’ve accrued in the property over time. It is a separate loan with its own interest rate, term, and repayment schedule.

The amount you borrow is based on your home equity. You build equity in your home by paying down the balance owed on your original mortgage and appreciation in your home’s value.

Higher Interest Rate

Just like a first mortgage, a second mortgage uses your home as collateral. This means your lender may have the right to foreclose on your home if you fail to make your payments. But the security this offers allows you to borrow at better rates than unsecured loans. A second mortgage usually has a higher interest rate than your original mortgage because, in the case of default, the primary mortgage is satisfied first. Home equity loans are usually used for:

• Debt consolidation
• College tuition
• Home renovations or maintenance projects
• Equity buyouts for separating and divorcing couples

Please contact me if you would like to learn more