WordNet
n. a mortgage that is subordinate to a first mortgage
Wikipedia
A second mortgage is a lien on a property which is subordinate to a more senior mortgage or loan. Called lien holders positioning the second mortgage falls behind the first mortgage. This means second mortgages are riskier for lenders and thus generally come with a higher interest rate than first mortgages. This is because if the loan goes into default, the first mortgage gets paid off first before the second mortgage. Commercial loans can have multiple loans as long as the equity supports it.
When refinancing, if the homeowner wants to refinance the first mortgage and keep the second mortgage, the homeowner has to request a subordination from the second lender to let the new first lender step into the first lien holder position.
A second mortgage can be structured as a fixed amount to be paid off in a specific time, called home equity term. They can also be structured like a credit card giving the borrower the option to make a payment less than the interest charged each month.
Due to lender guidelines, it is rare for conventional loans for a property having a third or fourth mortgage.
In the terms of foreclosure, a second lien holder can start the foreclosure process when a homeowner stops making payments. The second lien holder has to satisfy the first mortgage balance before they could collect on the second mortgage balance.
In situations when a property is lost to foreclosure and there is little or no equity, the first lien holder has the option to request a settlement for less with the second lien holder to release the second mortgage from the title. Once the second lien holder releases themselves from the title, they can come after the homeowner in civil court to pursue a judgement. At this point, the only option available to the homeowner is to accept the judgment or file bankruptcy.
Generally, when considering the application for a second mortgage, lenders will look for the following:
- Significant equity in the first mortgage
- Low debt-to-income ratio
- High credit score
- Solid employment history
Usage examples of "second mortgage".
Though Hope didnt say anything about it to Rio, in order to buy the new drill bits and the extra pipe he had ordered, she would have to dip into the money she had set aside to pay off the second mortgage.
This let him make a sizeable, down payment, with a first mortgage at the usual six per cent and a second mortgage at eight and a half per cent.
The Howard bonus for Nancy cleared that too-expensive second mortgage.
I had all my assets tied up in the company, including a second mortgage on our home.
On the understanding, it is natural, that the conditions of the issue are, how shall I say, more substantial, less open to misunderstandings, than the second mortgage of Mr.
It is better to be a live owner of some finely engraved paper than to be a dead holder of a second mortgage.
Could he tell him that William Steeves had put his position as President of the First Mercantile Bank of Denver in severe Jeopardy by granting the second mortgage when the situation at the Overlook was clearly hopeless?
Of course, she still had the second mortgage on her cottage to pay off, but everything would work out.
He had been overheard saying he was going to be forced to take out a second mortgage on his house.
It had been a mortgage default, not that it mattered one whit, but the sort of people who got their second mortgage from an insurance company and then made thousands of dollars’.
And to make matters worse, the manager had taken out a second mortgage and bought additional bonds on margin.