Second Mortgages


Equity Lines of Credit

Second mortgages are primarily fixed rate products, most commonly set for 15 or 30 years. They are used as a stand-alone note for various needs of a homeowner or can be used in conjunction with a first mortgage during a purchase transaction to avoid the need for mortgage insurance at higher loan to values. Typically, the minimum institutionalized second mortgage must be at least $10,000. The funds are distributed at the close of escrow and then are paid back on the predetermined terms.

Equity lines of credit have predetermined dollar amounts, terms and rate structures, usually adjustable rates. Secured against real property, the funds borrowed are against the equity in the home, thus the name "equity lines of credit". The available funds can be borrowed via check or sometimes a credit card and then repaid in full or with monthly installments.

Similar to the use of a credit card, if a balance does not exist, then payments are not required and interest is not charged, although some may have an annual fee for servicing. They are usually for a fifteen or twenty five year period.

Similar to a second mortgage, they can also be used in conjunction with a first mortgage during a purchase transaction to avoid the need for mortgage insurance at higher loan to values. Any requested funds are disbursed at the close of escrow and then are paid back on the predetermined terms.

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