Understanding a 2nd mortgage foreclosure is crucial for homeowners. Save for the richest members of society, virtually all homeowners these days have a mortgage on their houses. For most people, this is the most practical and most economical way of eventually taking complete possession of their home.
Mortgages are certainly a big financial help to homeowners but for some, just one mortgage is still not enough. If this is the case, you have the option of taking out a second mortgage on your home.
People take out second mortgages for a variety of reasons such as for the payment of outstanding debt, for the remodeling of their homes or for putting their children through college.
Whatever the reason, you can usually get a second mortgage on your home quite easily either from the same bank or from a different one. However, if you fail to make the payments on your second mortgage, you may have to face a foreclosure process.
1st 2nd mortgage
When a homeowner has more than one mortgage on his home, the first mortgage always supersedes the second mortgage. It is the same case with a first and 2nd mortgage foreclosure.
This can be quite confusing to a lot of people and many of them wrongly assume that just because they have taken care of their first mortgage it means they no longer have to keep their second mortgage payments up to date. Quite the contrary, a homeowner has to stay current with both of his/her mortgages.
2nd mortgage foreclosure
Delinquency on second mortgages merits the issuance of a second mortgage foreclosure notice from your lender. Even if you are up to date in making payments on your first mortgage, you can still face foreclosure if you don’t make good on the payments on your second mortgage.
Once the foreclosure proceedings are in place, your home will be either be placed in the market or sold at an auction. The profits will be divided between the first and the second mortgage lenders to cover all the unpaid balance that you still owe. In case there is still some balance left from the proceeds, it will then be given to you.
A lot of people end up losing their homes and going into serious debt due to their lack of understanding of the principles of a second mortgage. In order to avoid such dire circumstances, it would be best to plan your house payments well right from the beginning.
To prevent a 2nd mortgage foreclosure it is best if you seek the advice of a financial expert in doing so. In case you foresee any problems with either your first or second mortgage payments, the most practical step to take is to notify your lenders in advance. By discussing all your options with them, you may still be able to avoid a 2nd mortgage foreclosure.