2nd-Mortgage

Second mortgage and home loan are among the most popular ways for homeowners to get extra cash for important life events. Also known as home equity loans, second mortgage allow you to borrow money “against the equity in your home”. The concept sounds simple enough, but there are things that you should understand about it before you agree to take one out.

After the first mortgage is paid off in full, though, then any other liens, including the second mortgage, would be paid in order of when the lien was filed with the county recorder. If there is enough money to pay all of the second mortgages, then they get all of the rest of the money until their lien is paid in full. Then anything remaining goes to other liens or to the homeowners as their gain from the sheriff sale. If there is not enough to pay off the second mortgages (or even all of the first mortgage), then the second will not be paid off at all or in full. It will be up to the mortgage company to sue afterwards for a deficiency judgment after the foreclosure has ended (an unlikely occurrence).

There are closing costs with them just as there are with first mortgages. Make sure you are fully aware of all of the closing costs associated with the/you will have to pay for loan, so that you can be sure the total cost of the loan balances the increased value of the home or the savings on the credit cards!

It really pays to shop around for a second mortgages, since the rates can vary widely/a great deal. You should also shop around for the lowest closing costs. Closing costs for them are a proportionately greater expense/cost since the loan is typically for a smaller amount than a first mortgage.