Truelight Academy - LDS Home Education
Posted on 12/01/2020 By Kitty Wompuss No Comments on Second mortgage loan loan Second mortgage loan is a term that is used interchangeably with the term “home equity loan” these days. A second mortgage is a loan taken out on your home and secured by the amount of equity you have gained in the house, either through paying down a portion of the principal or through increased valuation in the housing market. Technically, home equity loans can also be provided as home equity lines of credit (HELOCs) but the hom
Generally, the interest rate on a second mortgage is going to be two to three percent points higher than the available rate on a thirty year primary mortgage. One of the reasons for the higher interest rate is the shorter life of the loan. The other is that a second mortgage loan is subordinate to the primary mortgage on the house.
What this means is that, should the home go into foreclosure and be sold, it is the lender on the primary mortgage who gets paid first . According to real estate law, the primary lender may collect the entire principal owed as well as all the remaining interest and any foreclosure costs. The lender on the second mortgage loan is then paid from whatever remains.
Truelight Academy - LDS Home Education