Unlock the equity in your home with a fixed-rate second mortgage while keeping your existing first mortgage intact.
A second mortgage allows you to tap into your home's equity without refinancing your primary mortgage. This is especially valuable if your first mortgage has a lower interest rate than current market rates.
Unlike a Home Equity Line of Credit (HELOC) with variable rates, a second mortgage typically offers fixed interest rates and consistent monthly payments throughout the loan term.
Second mortgages provide funds as a one-time lump sum, making them ideal for large, one-time expenses such as major home renovations, debt consolidation, or education costs.
Because second mortgages are secured by your home, they typically offer significantly lower interest rates compared to unsecured debt options like personal loans or credit cards.
Second mortgages come with various term lengths, typically ranging from 5 to 30 years, allowing you to choose a repayment schedule that aligns with your financial goals.
The interest paid on a second mortgage may be tax-deductible if the funds are used for home improvements or renovations that substantially increase your property's value.
Typically need 15-20% equity remaining after both loans. Lenders often require a combined loan-to-value ratio of 80-85%.
Minimum 660-680 score for most lenders. Higher scores qualify for better rates and terms.
Maximum DTI ratio of 43-50% including all debts. Includes both first and second mortgage payments.
Stable, documentable income source required. Typically need 2 years of income history.
Must be current on existing mortgage payments. No late payments in the last 12 months preferred.
Property must be in good condition. Appraisal required to determine current home value.
Complete our initial assessment to understand your loan options and eligibility.
Submit your formal loan application with all necessary documentation.
A professional appraiser will determine your property's current market value.
Our team reviews your application, credit, income, and property details.
Sign your loan documents and receive your funds as a lump sum.
| Feature | Second Mortgage | Home Equity Line of Credit |
|---|---|---|
| Fund Distribution | One-time lump sum | Draw as needed during draw period |
| Interest Rate | Fixed rate | Variable rate (typically) |
| Monthly Payment | Fixed monthly payments | Variable during draw period |
| Term Length | Fixed term (5-30 years) | Draw period (5-10 years) + repayment period (10-20 years) |
| Best For | One-time large expenses | Ongoing or uncertain expenses |
| Interest Accrual | On full loan amount | Only on amount drawn |
| Closing Costs | Typically higher | Often lower |
The second mortgage helped us consolidate our high-interest debt while keeping our original mortgage intact. The fixed payment makes budgeting so much easier!
We needed funds for our daughter's college education. The second mortgage gave us the lump sum we needed at a much better rate than student loans or personal loans.
Our kitchen renovation was made possible through our second mortgage. The process was straightforward, and we didn't have to touch our primary mortgage with its great rate.
A second mortgage is a loan taken out against the value of your property, in addition to your primary mortgage. It allows you to borrow against your home equity with a fixed interest rate and term, providing a lump sum payment that can be used for various purposes, such as home improvements, debt consolidation, or major expenses.
The main difference is in how you receive and repay the funds. A second mortgage provides a one-time lump sum with fixed interest rates and monthly payments. A Home Equity Line of Credit (HELOC) works more like a credit card with a variable interest rate, allowing you to draw funds as needed during a draw period, followed by a repayment period.
Most lenders allow you to borrow up to 80-85% of your home's value, minus what you still owe on your first mortgage. For example, if your home is worth $400,000 and you owe $200,000 on your first mortgage, you might be able to borrow up to $120,000-$140,000 through a second mortgage (depending on the lender's maximum combined loan-to-value ratio).
Second mortgages typically have terms ranging from 5 to 30 years, with 15 years being common. Interest rates are usually fixed and higher than first mortgage rates but lower than unsecured loans. The exact rate will depend on your credit score, loan-to-value ratio, debt-to-income ratio, and current market conditions.
Closing costs typically range from 2% to 5% of the loan amount and may include application fees, origination fees, appraisal costs, title search fees, and recording fees. Some lenders offer no-closing-cost options, but these usually come with a higher interest rate to offset the lender's costs.
It's possible but challenging. Most mainstream lenders require a minimum credit score of 660-680 for second mortgages. With lower scores, you might need to explore alternative lenders that specialize in subprime loans, but expect higher interest rates and fees. Improving your credit score before applying can provide better options and terms.
Under current tax laws, interest on a second mortgage may be tax-deductible, but only if the funds are used to buy, build, or substantially improve the home that secures the loan. Interest is not deductible if used for personal expenses like debt consolidation or education costs. Consult a tax professional for advice specific to your situation.
The primary risk is that your home serves as collateral for both your first and second mortgages. If you're unable to make payments, you could face foreclosure and lose your home. Additionally, second mortgages increase your overall debt and monthly obligations, which could strain your budget, especially if your income decreases or expenses increase unexpectedly.
Our mortgage specialists are here to help you navigate the process and find the right solution for your needs.
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For information purposes only. This is not a commitment to lend or extend credit. Information and/or dates are subject to change without notice. All loans are subject to credit approval. E Mortgage Capital, Inc. d/b/a E Mortgage Capital, NMLS# 1416824. Equal Housing Lender (NMLS consumer access: https://www.nmlsconsumeraccess.org/_)
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A toll-free consumer hotline is available at 1-877-276-5550. The department maintains a recovery fund to make payments of certain actual out of pocket damages sustained by borrowers caused by acts of licensed mortgage banker residential mortgage loan originators. A written application for reimbursement from the recovery fund must be filed with and investigated by the department prior to the payment of a claim. For more information about the recovery fund, please consult the department’s website at