I’m pretty young and I don’t know a lot about mortgages in the first place but how and why can you take a second mortgage on your house to gain a bunch of money? I hear people say it all the time in shows and movies and it sounds like a very bad thing.
In: Economics
Fundamentally, a mortgage is a loan where the collateral you offer up is real estate. Typically, the ‘first’ mortgage is for you buying the property.
But it is very possible that in time as you pay off your first mortgage you need another big wad of cash. If the property is now worth more than what is left on the first mortgage, you may be allowed to take a second mortgage on the same property for the difference in value.
But as emphasized, it is mostly used in media as a joke or literary device to say “X needs a big sum of money”.
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