What is a second mortgage? It’s simply another mortgage on your home – a loan secured against the property. The term “second” indicates that the loan does not have priority on your home in case you default. Instead, your first mortgage has priority and would be paid before any funds go towards the second mortgage.

Why would somebody risk their home with a second mortgage? These types of loans are appropriate for times when you need a lot of money. You may not have unlimited credit on your credit cards, and finding the cash just lying around is difficult.

Where is there a lot of equity or value? In the home. By borrowing against a home, borrowers can get bigger loans. In addition, second mortgages may allow for bigger loans because the lender considers a loan against the home to be safer.

Some common uses for second mortgages are:

• Home improvements

• Avoiding Private Mortgage Insurance

• Debt Consolidation Programs

• Purchasing additional homes

Some people use second mortgages for other uses – and sometimes they are not wise uses. It can be tempting to tap a large source of money with a second mortgage, but you have to remember that you’re borrowing against your home. In some cases, a second mortgage is the only way to pay for a need.