Second Mortgage
What Is A Second Mortgage?
A second mortgage loan is a lien or charge registered on a property’s title in second priority, allowing homeowners to leverage their home equity for financing. Second mortgages share many characteristics of first mortgages, such as a term, interest rate, monthly payment, pre-payment penalties, and maturity date. However, second mortgages differ significantly from first mortgages in terms of their terms, interest rates, monthly payments, and features. It is important to carefully consider the differences between the two types of mortgages before deciding which one is right for you.
Getting A Second Mortgage
Before applying for a second mortgage, it is recommended to consult with a mortgage broker to understand the process and associated costs. Afterward, you will need to complete a mortgage application and provide valid government-issued photo ID. The mortgage brokerage will order an appraisal inspection and the borrower will schedule the inspection. The mortgage broker will receive a mortgage commitment with terms and an interest rate agreeable to the borrower. Once all conditions are met, the borrower will sign the second mortgage approval documents and complete the mortgage with their lawyer to receive any available equity takeout funds. Second mortgages typically do not require income or credit qualifications.
Second Mortgage Process
Just like a first mortgage, the process to get a second mortgage is very similar, however there are different qualification requirements.
- Borrower(s) must apply for a second mortgage
- Their mortgage broker will order a property appraisal from an approved appraisal company
- Once the appraisal inspection has been complete, and the report provided, the broker can shop with second mortgage lenders to get a mortgage commitment
- Upon the mortgage commitment being issued and signed by all parties
- All conditions of the mortgage commitment must be satisfied, then the lender will send mortgage instructions to the borrower(s) lawyer
- The borrower(s) then would arrange to meet with their lawyer to sign final second mortgage closing documents
- On the date of closing, the lender will fund the second mortgage, once they are satisfied with all conditions
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