Can someone please explain to me what a mortgage is , and what a second mortgage is?
Tuesday, 20. July 2010
Especially, what is a second mortgage? and a lien? My parents never owned a home and I just don’t get these terms.
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Cat Says:
A mortgage is a loan for your home, with the house put up as collateral. In otherwords, until the mortgage is paid, the bank legally owns part of your house.
A second mortgage is another loan, with the house as collateral. If you don’t make good on the loans, the bank can take your house.
Spock (rhp) Says:
wikipedia has all this and more
KeithOtron Says:
A mortgage is a loan taken out on your house. The banks gives you money so you can buy the house and you make mortgage payments to the bank. If you don’t pay they take your house. Second mortgage is the same thing. A lien is when you owe someone money and you wont pay them and they can take out a lien on any property you own. Which means if you go to sell the property you can’t until you pay off the lien.
Andrew K Says:
a second morgage is when you get a loan from the bank and you put your house up as colateral
if you don’t pay the morgage you lose your house
Phosphoreign Says:
I may be a little off on the lien, but long story short is, a mortgage is a loan you get on your house. A second mortgage is a second loan you can take out on your house if you still have equity (that is, value in the house above what you owe… so if you get a loan for $300,000 on a home, and you put $100,000 down payment, and pay a total of $400,000 for a house that is worth $400,000, you have $100,000 in equity, or value in the house that you own, and that you owe to no one else). So a second mortgage is a mortgage you take out, above the original mortgage you used to buy the house, against whatever equity is in the house… (say you have that $100,000 in equity, or value left in the home, and you get into a car accident, and you have $50,000 in bills, you can get a second mortgage of $50,000 against that $100,000). A lien (I think) is the amount of the value of the house that is still owned by a bank or other lender (the $300,000 in our earlier example). So, if you sold the house for $500,000, the first thing you would have to do is pay off the lien against the house, for $300,000 before you could give the house to the new owner.
daeve930 Says:
Let’s say you own a house valued at $100,000. When you bought it, you borrowed $80,000 from a lender and paid the other $20,000 yourself. You have a first mortgage with that lender. Depending on the state you live in, it may be a Deed of Trust, but we usually call both things a mortgage. It’s a document that states you borrowed money from the lender, and how you’re going to pay it back, over what amount of time, how much each month and who owes the money.
So now it’s some years later and you’ve paid about $20,000 on the principal balance. You need a new roof and some plumbing work, or to take a nice vacation, or pay for your daughter’s wedding or whatever, but don’t have the money. You can get a second mortgage on the house, maybe you can get 80% of the value (that’s both loans added together) so you could get $20,000.
The first and second refer to place of the mortgage…who gets paid first. You could have refinanced the 1st yesterday, but it’s still the first because it takes the place of the original 1st, and the second is still subordinate.
A lien is a legal document the lender places on your house to say it’s being used as collateral on a loan. Once it’s paid off, the lender sends you a release and you take it to the courthouse to have it recorded. Some lenders do the recording themselves, but it’s your problem if it doesn’t get done.