Second Mortgages

A second mortgage may also be referred to as a second loan, a home equity loan, or even a "piggyback" mortgage or loan. A second mortgage is an additional mortgage that a homeowner takes out on their home, above and beyond their first or primary mortgage. Second mortgages may typically be taken out up to 85% of the appraised value of the home (meaning that the total loan-to-value of the primary and second mortgage add up to 85% of a home's market value).

A second mortgage gets its name from the fact that it is a subordinate mortgage to the primary mortgage and is in a second lien position behind the primary mortgage. A second lien position means that in the event of a foreclosure, the proceeds of the sale of the home would pay off the primary mortgage first, and the second mortgage second. It is also possible for a home to have third, and fourth mortgages, the number referring to the loan's relative lien position.

Second Mortgage Rates

Similar to primary mortgages, the interest rate for a second mortgage can either be fixed or adjustable. For a fixed-rate second, the interest rate and monthly payment will remain constant throughout the term of the loan. For an adjustable-rate second mortgage, the interest rate and the monthly payment will fluctuate over the term of the loan.

Second Mortgage Term

Second mortgage repayment terms are typically not as long as a primary mortgage (which is typically 30 years). Some second mortgage loans may, however, take 15 to 20 years to repay.

Second Mortgage Fees

Similar to other types of loans, lenders may charge borrowers fees to obtain a secondary mortgage. Shopping various lenders should help to keep the fees reasonable.

Uses for a Second Mortgage

The most common uses for a second mortgage are:

• Obtain equity from the home - A second mortgage is one means of obtaining cash from the equity in a home. The other means being cash-out refinances or a home equity line of credit (HELOC). A second mortgage may be a better alternative to refinancing when the money obtained from the mortgage is for something more short term than the "normal" 30-year term of a primary mortgage (such as the purchase of an automobile which most people would look to pay off in four or five years). A fixed-rate second mortgage may be preferable to a home equity line of credit when the borrower needs all of the money at once.
• Avoid paying PMI - A second mortgage that is piggybacked on the primary mortgage may be used as a way of avoiding private mortgage insurance (PMI). In this instance, a borrower would take out a first mortgage for 80% of the value of the home avoiding PMI, and a second mortgage for the amount not covered by the first mortgage and the borrower's down payment. You may see these referred to as 80/5/15, 80/10/10, or 80/20 loans (The first number refers to the percentage of the purchase price covered by the the primary mortgage, second number the amount covered by the down payment, and the third number is the amount covered by the second mortgage. Obviously an 80/20 is 80% first mortgage and 20% second mortgage with no down payment.
• Avoid taking out a jumbo loan - A second mortgage can be used as a means of taking out a jumbo loan which typically has a higher interest rate than a conforming loan. In this case, mortgage number one would be for an amount equal to the Fannie Mae, Freddie Mac allowed maximum, and mortgage two less the borrower's down payment would cover the remaining purchase price of the home.

Mortgage Comparison Tool

Get multiple quotes. Choose the best rate. No obligation.

Categories and Articles

Common Mortgage Types
• Adjustable Rate Mortgage
• Fixed Rate Mortgage
• Understanding Arm Indexes

Government Mortgages
• FHA Loans
• HCFP Loans
• VA Loans
• State Housing Financing

Home Equity Loans
• Home Equity Line Of Credit
• Obtaining Equity From Your Home
• Reverse Annuity Mortgage
• Second Mortgages

More Resources
• Mortgage And Lender FAQ
• Mortgage Information Search

Mortgage Process
• Avoiding A Jumbo Mortgage
• Avoiding Private Mortgage Insurance
• Dealing With Credit Issues
• Glossary Of Mortgage Terms
• Mortgage Application Process
• Mortgage Laws And Regulations To Protect The Consumer
• Shopping For A Mortgage
• Understanding Credit

New Home Mortgage
• How Much House You Can Afford
• How Much Should You Put Down On A Home
• Mortgage Pre Qualification And Pre Approval
• Mortgages For Purchasing A Home

Refinancing A Home
• Refinancing Your Home

Related Products And Services
• Mortgage Life Insurance
• Private Mortgage Insurance
• Title Insurance

Specialty Mortgages
• Alt A Mortgages
• Balloon Mortgage
• Bridge Loan
• Construction Loan
• Eighty Twenty Mortgages
• Graduated Payment Mortgage
• Growing Equity Mortgage
• Interest Only Mortgage
• Low Doc No Doc Mortgages
• Subprime Loan

Subscribe to Our Mortgage Articles

Full Info

Mortgage Lenders By State

AL AK AZ AR
CA CO CT
DE DC
FL
GA
HI
ID IL IN IA
KS KY
LA
ME MD MA MI MN MS MO MT
NE NV NH NJ NM NY NC ND
OH OK OR
PA
RI
SC SD
TN TX
UT
VT VI VA
WA WV WI WY

Profiles of Leading Lenders

ABN Amro Mortgage Group

Aegis Wholesale Corporation

Allied Home Mortgage Capital

American Home Mortgage Corp

American Pacific Mortgage

America's Mortgage Broker LLC

Amstar Mortgage Corporation

Amtrust Mortgage Corporation

Assurity Financial Services LLC

Bank Of America NA Charlotte

Branch Banking And Trust Co

Central Pacific Mortgage Co

Chase Home Finance LLC

Countrywide Home Loans

CTX Mortgage Company

DHI Mortgage Company Ltd

Eagle Home Mortgage

Empire Equity Group

Family First Mortgage Corp

Financial Freedom Senior Funding Corp

First Horizon Home Loan Corporation

First Magnus Financial Corp

First National Bank

Flagstar Bank FSB

Franklin Bank SSB

Gateway Mortgage Group LLC

Global Mortgage Inc

GMAC Mortgage Corporation

Green Point Mortgage Funding

Guild Mortgage Company

Irwin Mortgage Corporation

JP Morgan Chase Bank

Keybank National Association

National Bank Of Commerce

National City Bank Indiana

NVR Mortgage Finance

Pacific Reverse Mortgage Inc

Pinnacle Financial Corporation

Primary Residential Mortgage

Pulte Mortgage LLC

RBC Mortgage Company

Sierra Pacific Mortgage

SN Servicing Corporation

Sunset Mortgage Company

Suntrust Mortgage

Union Planters Bank NA

Universal Mortgage Corporation

USA Home Loans Inc

Washington Mutual Bank FA

Wells Fargo Bank

Copyright © 2004-2008. All Rights Reserved. Moving Traffic, Inc., operator of CityTownInfo.com, is not a broker or a lender, and all offers for loans or mortgages found on this site are made solely by the advertiser.