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Simple English definitions for legal terms
second mortgage
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A quick definition of second mortgage:
A second mortgage is a loan that you take out on a property that already has a first mortgage. It's like borrowing more money on top of what you already owe. The second mortgage is usually smaller than the first one, but it still uses your property as collateral. This means that if you can't pay back the loan, the lender can take your property to get their money back. It's important to be careful when taking out a second mortgage because it can put you at risk of losing your home.A more thorough explanation:
A second mortgage is a type of mortgage that is subordinate to a first mortgage on the same property, but is senior to any later mortgage. This means that if the property is sold or foreclosed, the first mortgage will be paid off before the second mortgage.
For example, if a homeowner has a first mortgage of $200,000 and takes out a second mortgage of $50,000, the second mortgage will only be paid off after the first mortgage is fully paid. If the property is sold for $250,000, the first mortgage will be paid off in full and the remaining $50,000 will go towards paying off the second mortgage.
Second mortgages are often used to borrow against the equity in a property. For instance, if a homeowner has paid off a significant portion of their first mortgage, they may be able to take out a second mortgage to finance home improvements or other expenses.