Definition - What does Second Mortgage mean?
A second mortgage is a mortgage that a person takes out after they already have a mortgage on their home.
Second mortgages are typically used to generate cash to pay for large expenses like college tuition. Some people also choose to use second mortgages as an alternative to buying mortgage insurance for their primary mortgage.
Insuranceopedia explains Second Mortgage
Second mortgages tend to have higher interest rates than primary mortgages. This is because the liquidation of assets that occurs when a lender defaults and their home is seized will pay off the primary mortgage first. Whatever is left over will go to the second mortgage. So, since liquidation is less likely to pay it off, second mortgage lenders have to assume more risk for these loans. However, second mortgages can allow people to finance things they may not have been able to finance otherwise. They also provide a decent alternative to expensive private mortgage insurance.
- Mortgage Insurance Policy
- Private Mortgage Insurance (PMI)
- Principal, Interest, Taxes, and Insurance (PITI)
- Form No. 1 Basic or Standard Homeowners Insurance (HO-1)
- Form No. 2 Broad Homeowners Insurance (HO-2)
- Form No. 3 Special Homeowners Insurance (HO-3)
- Form No. 4 Contents Broad Form Homeowners Insurance (HO-4)
- Mortgage Protection Life Insurance
- Standard Mortgage Clause