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A second mortgage is a loan that is secured by the equity in your residence. When you obtain a second mortgage loan the lender will spot a lien on your home. This lien will be recorded in 2nd position right after your principal or 1st mortgage lender's lien, therefore the phrase second mortgage. A second mortgage is also sometimes referred to as a house equity loan. There is no difference among a property equity loan and a second mortgage. These are just two distinct terms for the identical topic. A second mortgage can either be a fixed-rate loan or an adjustable-rate credit line. Interest prices and loan plan terms will fluctuate from lender to lender so it is important to shop about and evaluate ahead of committing to any one offer you. www A second mortgages are ideal when you just want to tap into your equity, plan to move soon, or are unsure about the amount you want to borrow. One more plus of a second mortgage loan is that the interest you pay back on the loan may possibly be tax deductible. Consult your tax advisor regarding your personal situation but in most circumstances the interest is one hundred% fully deductible as lengthy as the combined loan to worth of your 1st and 2nd mortgage do not exceed the value of your property. Loan proceeds from a second mortgage loan can be utilized for just about anything. Several consumers take out 2nd mortgage loans to consolidate debt, do home improvements or spend for their children college education. Whatever you make a decision to do with your loan proceeds it is important to keep in mind that if you default on your payment you can shed your residence so you will want to make positive that you are taking the loan out for a worthwhile objective. www A second mortgages aren't for absolutely everyone. You must weigh the cost of PMI and payments when picking your financing choices. Borrowing much more than 80% of your home's worth will topic you to personal mortgage insurance coverage. Your monthly payments must also be a factor in your choice. By taking out equity when refinancing your property, you will have a reduced payment than if you had both a mortgage and 2nd mortgage payment. Also, if you refinance in the future, you will have to pay off your 2nd mortgage.