Ways for a Closed-End Second Lien to be Taken Out
The closed-end second lien can be used to take cash out for home improvements, debt consolidation, and more. It can be taken out in the following ways:
1) As a “piggy-back” with a first lien.
The piggy-back allows buyers to take a conventional first mortgage with favorable terms, while concurrently giving them a second lien that provides them cash ready for use.
2) As a standalone second lien.
This is particularly beneficial to borrowers with existing favorable loan terms, such as a low, fixed interest rate. The borrower might not want to refinance out of such a loan to take out cash, and instead is able to took out a second mortgage to free up the cash.