What Is A Second Mortgage Loan?
A second mortgage is a home loan in the second position behind your first mortgage. You can obtain a second mortgage when buying a home or after (if you are looking to pull cash from the equity you have in the home).
When buying a home, a second mortgage is an excellent option to consider so that you can avoid paying mortgage insurance if you have less than 20% down. If you already own a property and need cash out to pay off high-interest debt, you may want to consider a second mortgage if your first mortgage has a low interest rate.
Second Mortgage Requirements
Here are the six basic requirements for obtaining a second mortgage.
Who Should Consider A Second Mortgage Loan?
Anyone with less than 20% down should consider a second mortgage to avoid mortgage insurance. Also, homeowners with a low rate on their first mortgage but who need to take some cash out should consider a second mortgage.
Second Mortgage Rates
Second mortgage rates are higher than first mortgage rates since the loan is in the second position behind your first mortgage. There is no exact rule of thumb regarding the spread between first and second mortgage rates, but usually, the difference between the two is somewhere between 3% and 5%.
Homebuyer And Homeowner Solutions
Comprehensive Evaluation: If you are interested in a second mortgage, we’ll conduct a comprehensive evaluation to determine whether it is a good solution for your short and long-term financial plans.
Industry Low Rates: We strive daily to deliver industry-low rates to our clients. That applies to all of our loan programs, including second mortgages.
Efficient Process: We stay up late at night thinking of ways to make the loan process more efficient for our clients. We’ll do our best to close your transaction quickly.
20+ Years Of Industry Experience
That’s what’s behind California Mortgage Finder. A newly licensed call center agent, or a loan officer who doesn’t know the difference between a margin and an index, can’t provide the same level of expertise as we can. If your loan officer thinks the Fed sets mortgage rates, you should find a new loan officer.
Second Mortgage Benefits
Here are the second mortgage benefits a loan applicant might see.
More Purchasing Power
With a second mortgage, you might be able to purchase a higher-priced home.
Flexibility
A second mortgage gives you flexibility and opens the door to opportunities.
No Mortgage Insurance
Consider a second mortgage if you are buying a home with less than 20% down. You’ll avoid the extra cost of mortgage insurance.
Access Your Equity
A homeowner can access their equity with a second mortgage. No need to refinance and lose that low rate on your first mortgage.
Pros And Cons Of A Second Mortgage
Here is an overview of the Pros and Cons of a second mortgage.
Pros
- Second mortgages allow you to avoid FHA MI or PMI.
- If you own your home, a second mortgage allows you to tap into your equity.
- Compared to credit cards, interest rates for second mortgages are generally lower.
- You can sometimes pay off a second mortgage faster than a first mortgage.
Cons
- You’ll have two loans attached to your home instead of one.
- Second mortgage rates are higher than first mortgage rates.
- Underwriting guidelines for second mortgages are stricter than first mortgage underwriting guidelines.
- You might need an appraisal, and there are costs associated with a second mortgage.
Is A Second Mortgage Right For You?
The best way to determine if a second mortgage is right for you is to educate yourself on the different options and then make a detailed list of each program’s benefits and drawbacks.
A second mortgage can provide a significant benefit in the right situation. Anyone looking to avoid paying MI or PMI should consider a second mortgage. And if you are looking to get cash out from your home but don’t want to touch your first mortgage, then a second mortgage is a perfect fit!
Explore Some Of Our Other Mortgage Programs

Conventional
A conventional mortgage is the most common mortgage program. Fannie Mae and Freddie Mac set the base guidelines.
FHA
FHA is a powerful program for those with less-than-perfect credit and a low down payment (or little equity).
Bank Statement
The Bank Statement mortgage is a great alternative to the traditional mortgage programs. Competitive rates and flexible guidelines.
VA
The VA mortgage program is one of the best in the industry. It offers industry-low rates; for some applicants, no down payment is needed.
Second Mortgage Loan FAQs
Can I Get A Second Mortgage On A Rental Property?
Yes, getting a second mortgage on a rental property is possible. Rates are higher, and the requirements are stricter.
Is Second Mortgage Interest Tax Deductible?
Please consult your tax professional to determine if second mortgage interest is a tax deduction.
Is Title And Escrow Services Needed With A Second Mortgage?
Yes, title and escrow services are required when obtaining a second mortgage.
How Long Does It Take To Close?
The usual time frame to close a second mortgage is 25-30 days.