Second Mortgages
A second mortgage is subordinate to the first mortgage and
gives the borrower the ability to get money for home
improvements, debt consolidation, or many other reasons without
disturbing their first mortgage. These mortgage loans are
convenient when you have a low interest first mortgage and can
sometimes loan up to 125% “combined loan to value”
of the value of the home.
For a real estate purchase it is common to take out a
first/second combination to avoid mortgage insurance or to keep
the first mortgage under the FNMA/FHLMC limit to avoid jumbo
loan rates. There are many applications for a second
mortgage
Anyone with equity in their current home really should give
some thought to taking advantage of the opportunity a second
mortgage will allow for investing in additional real
estate. You can have twice the asset appreciating by
taking a second on your current home and purchasing an
investment property.
