What is a 2nd mortgage?
2nd mortgage refers typically to a secured loan that is subordinate to another loan against the same property. Second mortgages are subordinate because, if the loan goes into default, the first mortgage gets paid off first before the second mortgage.
In real estate, a property can have multiple loans or liens against it. The loan which is registered with County or City registry first is called the first mortgage or first position trust deed. The lien registered second is called the second mortgage. A property can have a third or even fourth mortgage, but those are rare.
Generally, when considering the application for a second mortgage, lenders will look for the following:
Significant equity in the first mortgage
High credit score
Low debt-to-income ratio
Solid employment history
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