A 2 nd Mortgage Loan is subordinate to a first mortgage loan. There are typically two reasons why you would use a “2 nd”. It is primarily used when less than a 20% down payment is placed on a home at the time of purchase. In this situation, you would normally have to pay “PMI”, or mortgage insurance. These payments can be very high, so instead, borrowers will take out a second mortgage to cover the gap between what they put down and the 20%.
The other reason you may want to get a second mortgage is to obtain funding for home improvement, debt consolidation or other funding needs. The benefit is that you can do this without affecting your first mortgage. One of the more popular forms of a 2 nd is a home equity line of credit. A HELOC may provide you with a large amount of cash at low interest rates, with certain tax advantages unavailable with other kinds of loans.
HELOC’s also require you to use your home as collateral for the loan. In terms of time period, second mortgage loans may extend for as long as 15 or 20 years; others may require repayment in one year.
If this loan sounds like it would fit your needs, contact us today! We can answer any questions you have and help you apply for a 2 nd Mortgage loan.