second mortgage

noun

|Updated on: 4 Jul 2018

Definition of second mortgage

: a mortgage the lien of which is subordinate to that of a first mortgage

Recent Examples of second mortgage from the Web

Today's credit scores, by contrast, according to Amy Crews Cutts, chief economist for Equifax, are high: A median 770 Vantage score for HELOCs and 713 for home equity loans or second mortgages.

— kenneth r. harney, courant.com, "Booming Home Equity: Financial Opportunity Or Warning Sign?," 28 June 2018
Irish fans had taken out credit-union loans or second mortgages just to get here.

— mike jensen, Philly.com, "The World Cup is coming, and memories from '94 flood back," 13 June 2018
Recruit teachers through incentives such as soft second mortgages and discounts at local businesses.

— richard a. webster, NOLA.com, "New Orleans must do better for poor and seniors, Cantrell's transition group says," 4 May 2018
Mortgage interest deduction: The House caps it at $500,000 for new mortgages and eliminates it for second mortgages.

— phil mattingly, CNN, "GOP tax negotiators -- slowly but surely -- hammering out final bill details," 11 Dec. 2017
That’s like a credit card on steroids, a second mortgage.

— annie lowrey, The Atlantic, "Bitcoin 'Is Just Like the Dot-Com Bubble'," 26 Dec. 2017
One prominent securities regulator warned that people were now taking out second mortgages on their homes to buy bitcoin.

— ken sweet, Houston Chronicle, "Bitcoin futures soar amid virtual currency frenzy," 11 Dec. 2017
The process effectively involves two loans — one to cover the purchase of a home, and a second mortgage that effectively covers the renovation work.

— matthew goldstein, New York Times, "Detroit: From Motor City to Housing Incubator," 4 Nov. 2017
The second mortgage is forgiven for most buyers if the owner stays in the home for at least three years.

— tony bizjak, sacbee, "This Sacramento housing development is offering $300,000 homes with no down payment," 26 Oct. 2017

These example sentences are selected automatically from various online news sources to reflect current usage of the word 'second mortgage.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.

First Known Use of second mortgage

1912

in the meaning defined above

See Words from the same year

NEW! Time Traveler

Financial Definition of SECOND MORTGAGE

second mortgage

noun

What It Is

Also called a home equity loan, a second mortgage is secured by the equity in a house. Equity equals the value of the house less the balance owed on the homeowner's mortgage.

Second mortgages are not the same as home equity lines of credit (HELOCs).

How It Works

Second mortgages are similar in concept to traditional mortgages. For example, second mortgages generally must be repaid over a fixed period. Some lenders may offer fixed rates on these loans; others might offer variable rates.

Like first mortgages, most banks will also charge points and other fees for generating the second mortgage (attorney fees, title fees, insurance and documentation fees, for example), and these costs vary by bank. In some cases, the lender might charge a fee if the borrower prepays the loan. And because the loan is secured by a house, if the borrower defaults, the lender may foreclose on the house.

Why It Matters

Second mortgages can be viable options when compared to credit cards or other high-interest, unsecured loans. In addition, mortgage interest is tax-deductible, making the interest rates on second mortgages sometimes lower than they appear when one considers the tax savings.

However, not all second mortgages are created equally. Borrowers are well served to compare fees, interest rates, and repayment terms among lenders. After all, when a borrower defaults, his or her home could very well end up belonging to the bank for good.

Source: Investing Answers