The full explanation
It is called "second" because, if you stop paying and the home is sold to pay the debts, this loan is paid after the first one; if there is not enough money, the second lender may not get everything it is owed. That is why it often has a higher interest rate. It adds to your total debt and, if you cannot repay it, you could lose your home.
An example
Alberto already has a mortgage and wants another loan with the home as collateral. Before deciding, he adds up both monthly payments and checks whether he could cover them if his income dropped.
You will see it in…
- Home equity loan and HELOC offers
- County property records, as a second lien
- Your credit report
