What is a second lien loan?

Any mortgage that is not in first lien position.

When you get a home loan that mortgage is considered to be in a 1st lien position...... If you were to get two loans when you purchased the second loan would be considered to be in a 2nd lien position...... If you currently have one mortgage and you want to keep it and get a 2nd mortgage or Home Equity Line of Credit for debt consolidation or home improvement that 2nd mortgage would be considered to be in a 2nd lien position...... Hope that helps, best wishes.Sean

2nd lien means second position. For example, you buy a house and get a mortgage. 10-years later, you need to put on a roof, so you go to the bank for a home equity loan. They loan you the money. This new loan would be in second position because you got it after the first loan. If you were to add another loan, the next one would be in third position. If you were to pay off the first loan, the second loan would move up and be in first position. The position of a loan is really most important if there is ever a default and the house is sold in foreclosure. Whatever money is available from the sale goes to the first position lender first. Anything left over goes to the guy in second position, etc.

All real estate loans have an order of priority when it comes to default.. The first mortgage is a first position lien secured by the real estate.. the 2nd mortgage is in 2nd position, etc.. if the property forecloses, then the proceeds form the sale would go to pay the first position lien.. If there are any proceeds left over, then those funds would go towards the 2nd lien.. etc.. All liens against your property have to be paid, and all liens against your property have the right to foreclose, however if you stop paying on the 2nd, but continue to pay on the first, the 2nd could foreclose, but would have to satisfy the first lien before they would receive any proceeds.. since foreclosure sales usually net less funds than a traditional sale, most 2nd lien loans do not initiate foreclosure.. I'm a Broker here in Scottsdale AZ and I only lend in Arizona. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. William J. Acres, Lender411's number ONE lender in Arizona. 480-287-5714 WilliamAcres.com

A second lien loan is pretty much the same as first lien loan or first mortgage, exceptit is in second position. If for any reason someone is no longer able to make their mortgagepayments even after exhausting all funds and avenues for relief...the 2nd lien holder getspaid secondarily to the first lien holder on a foreclosure sale, and can end up with nothing.Thus, the real difference is in the risk level to the lender...higher risk. That is why itis always a higher fixed rate or an adjustable loan with a cap of 18% or so.