Microsofts Encarta Dictionary defines `Second Mortgage as an additional mortgage on a property that has been mortgaged once already, secondary to the main loan that is secured on the property.

Lets take an example. Alicia bought a large house, with a mortgage, in a Denver suburb. She wants to renovate her house but doesnt have the money to meet the estimated cost. She is already repaying the loan that she borrowed on her house. What does she do? She goes in for a Second Mortgage. That is, she pledges her house for the second loan. People go in for Second Mortgages for various reasons, mainly to meet emergency situations and large expenses.

When she applies for the second loan, Alicia thinks, Will the loan that I borrow this time be sufficient enough to meet the renovation budget?, How much money will I be able to raise in the Second Mortgage? and so on.

Mortgage companies charge a fee for lending money in the Second Mortgage, too. This fee is usually a percentage of the mortgage loan and is expressed as "points." 1 point means 1 percent of the borrowed amount. For example, if Alicia borrows $100,000 with a fee of 8 points, she would pay $8,000 in ""points."" The number of points charged varies from company to company. Here too, it is very important for the borrower to shop around and bargain for a lower fee. It is also advisable to check with the State Consumer Protection Office or Banking Commissioner to the statutory regulations regarding the limit of fees that can be charged by Mortgage Companies.

Once all these precautions are taken, with several mortgage professionals and companies around, getting a Second Mortgage is not impossible.

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