How Can You Get a Second Mortgage as a Single Mom?

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There are times in life when you need to come up with some cash that you don’t have readily available. That is often when people turn to second mortgages. A second mortgage is a type of secured loan taken against a piece of property and it is subordinate to the first loan on the property – meaning it comes after it in priority. In the event the borrower defaults on the loan, the first mortgage must be paid first. This leaves lenders for second mortgages at higher risk and consequently, interest rates on second mortgages tend to be higher.

Second Mortgage Requirements

What does a lender look at when considering a borrower for a second mortgage? The particulars can change from one lender to another but the basics area about the same.

  • A significant amount of equity in the property

  • A low debt-to-income ratio

  • Credit scores that are high and consistent

  • A sound history of employment

With these things in hand, most applicants will have no trouble securing a second mortgage with most lenders.

Terms and Terminology

A second mortgage is also called a home equity loan because it is based on the equity you already have in your home. From a financial standpoint, the terms are interchangeable. The only real difference in terminology is that the word “mortgage” refers to the documents or the legal instrument that make up the loan rather than having to do with the debt itself.

How long a second mortgage is issued for varies from lender to lender. Some second mortgages can last 30 years while others last only one year. It depends on the way the lender structures the loan and that can depend on the amount you are borrowing.

It is also not unheard of to have a third or even fourth mortgage, though this is fairly rare. Each level of loan carries higher risk for the lender and not many will take that chance. If they do, the loans are at considerably higher interest rates.

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