When someone gets a second mortgage in North Carolina, it’s known as a second loan against a property that already has an existing loan against it. A property in North Carolina or any other state can have multiple mortgages (or liens) against it. There is no limit on the number of mortgages a person can take out on a property, but having more than two is uncommon because of the inherent risk associated with them.
A second mortgage is usually called a subordinate loan to the first mortgage. This is because if the second loan were to go into default (i.e. not being paid) then the first mortgage will get paid first. This makes a second mortgage very risky for lending companies and thus these subsequent mortgages usually have high interest rates.
Second mortgages are much more difficult for a homeowner to obtain. Lenders will look at many factors when you are applying for a second mortgage on a home. These factors include how much equity you have with the first mortgage, what your debt vs. income ratio is, your employment status and available income, and your credit score. To ensure that you qualify for a second mortgage you want to make sure your debts are not too high to begin with and that you are financially stable for the most part.
A home equity loan is for the most part the same thing as a “second mortgage”. This is because you are taking a loan out against the equity that you have in your home against the first mortgage. So when you hear the term “home equity loan” or “second mortgage” consider them the same.
