What is a 2nd Mortgage?
A 2nd mortgage is a mortgage loan produce that can one of several forms. Some 2nd mortgages are just that, mortgages used to help a home owner purchase a home, often utilized to make up for a lack of a 20% down payment. The 80/20 loan has become a common method for those with little to put down on a home purchase. Using a second mortgage, the buyer is able to use another lender to help cover the cost of the downpayment.
A 2nd mortgage can also refer to a loan given to a homeowner based on home equity. Such a loan can either be a one time loan (a home equity loan) or a variable loan (like a credit card) called a home equity line of credit.
Choosing the right 2nd mortgage is an important step towards managing one’s budget well. 2nd mortgages carry lower interest rates than most other loans due to their backing by home equity.
Comments
Leave a Reply
You must be logged in to post a comment.