A second mortgage is just what its name implies, a loan that comes after the first mortgage you received to buy your home. The second mortgage may come in a traditional second mortgage format or a home equity format. Either way, the amount you can borrow for a second mortgage depends on your home’s value and how much you owe on it.

You should consider a second mortgage if you have a major home improvement project to handle or if you need to get rid of high interest credit card debt. Going for a second mortgage implies that some time has passed since you took out your first mortgage, and that you have equity built up in your home. If you have a $100,000 first mortgage and your home appraises at $150,000, you have $50,000 worth of equity. Whatever amount you decide to borrow for your second mortgage, make sure to compare offers from several different lenders. And always remember that with any mortgage, your home becomes the collateral for the loan. A second mortgage can be a great thing, but only when you have done all the research.