What it is:
How it works (Example):
Second mortgages are similar in concept to traditional mortgages. For example, second mortgages generally must be repaid over a fixed period. Some lenders may fixed rates on these loans; others might variable rates.
Why it Matters:
Second mortgages can be viable options when compared to credit cards or other high-interest, unsecured loans. In addition, 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 . After all, when a borrower defaults, his or her home could very well end up belonging to the bank for good.