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Second Mortgage, Home Equity Loan

Second Mortgage, Home Equity Loan

A secured loan (mortgage) that is subordinate to another loan against the same property. More specifically, the second loan in sequence.

Generally, second mortgage hass a higher interest rate and with shorter terms than a "first" mortgage. If the borrower defaults and the property is sold, the second mortgage is paid after the first.

Also called Home Equity Loan. A home equity loan is borrowing against the equity you have acquired in your home.

Lets suppose your original mortgage was $175,000.00, but your house is worth $225,000.00. The difference is $50,000.00. This $50,000.00 is the equity you have in your home. This is the portion you can borrow either in the form of a lump sum (if so it will be home equity loan or second mortgage), or in the form of a line of credit.

Home equity loans are used for all kinds of things. Such as, home improvement, college tuition, new cars, family vacations, etc.


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