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	Calculating Your 2nd Mortgage Payment is Critical
	Mortgages 80/20 Require a Secondary of Piggyback Loan
	Second Lien Mortgage Avoids the Higher Interest Rates
	Second Mortgage Home Equity May Require Personal Mortgage Insurance (PMI)
	Second Mortgage Interest is Deductible Only up to 100%
	Second Mortgages Typically Require Established Home Equity
	Silent Second Mortgages Can Be Used for Commercial & Residential Purposes
	Stand Alone Second Mortgages Factor the Costs of the Loan

Second mortgages have become popular over the last five years with the steep rise in home values. Many people have chosen to turn recently realized home equity into cash through the use of a second mortgage loan. These loans are often shorter than the primary mortgage - usually five to fifteen years in duration. A second mortgage is usually, though not always, provided as an adjustable rate mortgage (ARM). HELOCs are always adjustable rate loans.

Generally, the interest rate on a second mortgage is going to be two to three percent points higher than the available rate on a thirty year primary mortgage. One of the reasons for the higher interest rate is the shorter life of the loan. The other is that a second mortgage loan is subordinate to the primary mortgage on the house.

What this means is that, should the home go into foreclosure and be sold, it is the lender on the primary mortgage who gets paid first. According to real estate law, the primary lender may collect the entire principal owed as well as all the remaining interest and any foreclosure costs. The lender on the second mortgage loan is then paid from whatever remains.

Many lenders will limit the amount of the second mortgage based on what is currently owed on the first mortgage and how much the property is worth on the current housing market. The limit on total mortgage debt is capped at 80% of the home's worth. This means that what you owe on the first mortgage and the amount of the second mortgage can add up to a maximum of 80% of the home's current value.

If, for instance, you own a house that is appraised at $350,000 and you owe $250,000 on your primary mortgage, then you hold $100,000 in equity in the home. However the maximum your lender will allow is 80% total debt against the home's value. Since 80% of $350,000 is $280,000 and you owe $250,000 on the first mortgage, you are eligible for a second mortgage in the amount of $30,000.

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