A second mortgage is an additional loan taken out against a property that already has a primary mortgage. It uses the equity in the property as collateral, similar to the first mortgage.
The second mortgage is subordinate to the first mortgage. Eg: In the event of foreclosure, the first mortgage is paid off before the second mortgage. The recorded date of the mortgage is the determining factor between a 1st and 2nd mortgage within the official land records.
Common types of second mortgages are Home Equity Loans or Home Equity Lines of Credit (HELOC), although other loans exist, especially in the hard money or private lending market. Second mortgages typically have higher interest rates, and shorter payback periods.
So how can you tell if you have a second mortgage? Well, check your mail! All jokes aside, if you are unsure about a second mortgage position on any property, you can research the public records office for mortgage recordings, or simply order a title search.
To get more answers and a quote for property title search, call 1-877-848-5337.