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Which of the following is an example of a second mortgage? A) Home equity loan B)...

Which of the following is an example of a second mortgage?

A) Home equity loan

B) Reverse mortgage

C) Purchase-money mortgage

D) Construction loan

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Answer #1

Solution:

Which of the following is an example of a second mortgage?

A) Home Equity Loan (Correct Option)

- Second Mortgage is a loan that is taken in addition to the primary home loan. In the second mortgage, the loan is taken agaist the Home Equity. Home Equity is the difference of Market Value of Home and the remaining installment of primary loan taken for buying home.

B) Reverse Mortgage (Incorrect Option)

- Reverse Mortgage loan does not requires to make monthly payments of loan instead need to mortgage residential property to avail this loan. It does not require a person to make repayments every month and is only repaid after the borrower sells the property, moves out of it or passes away.

C) Purchase Money Mortgare (Incorrect Option)

- It is the loan by seller of the home, to the buyer, as a purchase transaction consideration.

D) Construction Loan (Incorrect Option)

- Construction loan is taken for the construction purpose only.

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