Second & Third Mortgages & HELOCs (Home Equity Line of Credit)

Second and Third Mortgages are liens against your property just like a traditional mortgage but will be repaid after the primary mortgage in the event of a default in respective order. Second and Third Mortgages typically are much smaller in amount, have shorter terms, and have higher interest rates.

The major benefit to a Second and Third Mortgage is the ability to split borrowed funds up to avoid unnecessary MI (mortgage insurance) charges by the bank. Another benefit to a Second and Third Mortgage is if you need to borrow a small amount and maintain a good rate on your primary mortgage, you don’t have to give up that rate to do so. If current market rates are much higher than they were when you acquired your primary loan, refinancing that loan to borrow some cash could be risky.

HELOCs are also considered Second or Third Mortgages except all the funds don’t have to be disbursed at one time. If you would prefer, you can qualify for a HELOC and use money as you need it. Repayment on a HELOC is based on the amount of funds you have used. Some banks will even issue you a check book or draft card to utilize the account. This is ideal for spring time projects and business owners.