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Second Mortgage
Most common uses of second mortgages:
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Typically second mortgages fall into one of
the two following categories:
- Equity seconds - Equity seconds are second mortgages that
use the equity you have in your house as the basis upon which
a lender loans you money. Most lenders will require an appraisal
in order to establish your house's value and the equity contained
therein. Borrowing with an equity second normally allows
you to obtain
a better rate due
to the fact that the money borrower is secured on property
you have ownership in.
- Over-equity seconds - Over-equity seconds are second mortgages
that lend you money over and above the value of your house.
Over-equity seconds are commonly known as "125's" or "115's" because
they allow a lender to loan you money at 125% or 115% of your
house's value. Requirement of appraisal is based upon the amount
of money borrowed. Typically, if you plan
to borrow over $35,000 on an over-equity loan, an appraisal
is required. Borrowing with an over-equity second allows you
to obtain a loan when a personal loan may have not been possible.
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