Definition
A second mortgage is a loan taken out against a home that already has a mortgage. It uses the home's equity as collateral and gives you access to a lump sum or a line of credit.
Understanding Second Mortgages
After you've built up some equity in your home, you can borrow against it with a second mortgage. In simple terms, a second mortgage is like getting a loan with your home as collateral again. Example: If your home is worth $300,000 and you owe $200,000, you might access a portion of your $100,000 equity. It's not the same as refinancing your primary mortgage; it doesn't replace your first loan but adds another layer of borrowing. This can be useful for home improvements or debt consolidation.
