Second Mortgages - Lines of Credit on Homes with Existing Loans

Based in Sacramento, Steven Birdsong is a senior loan officer with West Coast Mortgage and is tasked with the origination of home loans. Knowledgeable in his profession, Steven Birdsong engages closely with clients to arrange and fulfill first and second mortgage transactions. 

Also known as a junior lien, a second mortgage involves taking out a loan using the house as collateral, in the situation when another loan on the property already exists. Home equity loans and lines of credit are basic examples of this. 

The loan may be “closed,” which involves receiving the total amount of the loan up front, with no redraws allowed. It can also be open-ended and allow cash to be taken out over time up to the maximum credit threshold. As with credit cards, as the balance is paid down, more can be drawn on the account, again up to the limit.

One thing to be aware of is that second mortgage loans typically have a higher rate of interest attached than first mortgage loans. This has to do with the risk that, in cases where not enough equity exists in the property to pay off both loans, the second mortgage loan lender may not receive the full amount owed if the borrower defaults.