What is SECOND MORTGAGE? What does SECOND MORTGAGE mean? SECOND MORTGAGE meaning & explanation

What is SECOND MORTGAGE? What does SECOND MORTGAGE mean? SECOND MORTGAGE meaning – SECOND MORTGAGE definition – SECOND MORTGAGE explanation.

Source: Wikipedia.org article, adapted under https://creativecommons.org/licenses/by-sa/3.0/ license.

A second mortgage is a lien on a property which is subordinate to a more senior mortgage or loan. Called lien holders positioning the second mortgage falls behind the first mortgage. This means second mortgages are riskier for lenders and thus generally come with a higher interest rate than first mortgages. This is because if the loan goes into default, the first mortgage gets paid off first before the second mortgage. Commercial loans can have multiple loans as long as the equity supports it.

When refinancing, if the homeowner wants to refinance the first mortgage and keep the second mortgage, the homeowner has to request a subordination from the second lender to let the new first lender step into the first lien holder position.

A second mortgage can be structured as a fixed amount to be paid off in a specific time, called home equity term. They can also be structured like a credit card giving the borrower the option to make a payment less than the interest charged each month.

Due to lender guidelines, it is rare for conventional loans for a property having a third or fourth mortgage.

In the terms of foreclosure, a second lien holder can start the foreclosure process when a homeowner stops making payments. The second lien holder has to satisfy the first mortgage balance before they could collect on the second mortgage balance.

In situations when a property is lost to foreclosure and there is little or no equity, the first lien holder has the option to request a settlement for less with the second lien holder to release the second mortgage from the title. Once the second lien holder releases themselves from the title, they can come after the homeowner in civil court to pursue a judgement. At this point, the only option available to the homeowner is to accept the judgment or file bankruptcy.

Generally, when considering the application for a second mortgage, lenders will look for the following:

1. Significant equity in the first mortgage
2. Low debt-to-income ratio
3. High credit score
4. Solid employment history
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What does it mean when you have a thin credit file?

Question by mcgeeharley: What does it mean when you have a thin credit file?
I tried to get a copy of my free credit score and it told me that my credit file was to thin to receive. What exactly does that mean? Any help would be greatly appreciated!

Best answer:

Answer by John Michaels
It just means there’s little or no information held on you by a credit reference agency (CRA),Lenders hate thin files because their decisions (the accuracy with which they can predict bad debt rates) are less good than where they have more data.Decisions are much more exact (so more profitable) where applicants have lotting of data showing either bad, or good, payment records.Young people and recent migrants tend to have thin files, and score lower for this reason even if there is no adverse information held.

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I have a high Transunion credit score. Does this mean that my other two scores will likely be good as well?

Question by Kim: I have a high Transunion credit score. Does this mean that my other two scores will likely be good as well?
I have a high Transunion credit score. Does this mean that my other two scores (Experian and Equifax)will likely be good as well?I am applying for a home loan real soon, and just want to make sure that my finances are in order before I do.

Best answer:

Answer by CatDad
These are all 3 freestanding companies with different scoring models.The underlying info in your credit reporting about your credit history is the key factor. If you have a very good history of using attributing wisely and paying on time, then all credit scores should be high. The FICO score is the most important score.

Know better? Leave your own answer in the comments!