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A 2nd mortgage is any property loan which is placed secondary to a first mortgage. In case of default the 1st mortgage is paid first and the 2nd mortgage is only paid if there are sufficient remaining funds. A 2nd mortgage is often called an equity loan and the amount of a 2nd mortgage is often tied to the amount of equity available in a property. The formula for determining the amount of a 2nd mortgage varies from one lender to another and some 2nd mortgage loans can be for amounts greater than the property's existing equity. A 2nd mortgage may be either a fixed dollar amount at a fixed interest rate for a fixed period of time, much like a 1st mortgage, or a 2nd mortgage may be a "home equity line of credit." As a line of credit the funds from a 2nd mortgage are accessed and interest is paid only as funds are needed, much like a credit card.
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