Question:

What is a stand alone 2nd mortgage?

Answer:

A stand alone 2nd mortgage is nothing more than a second mortgage taken on its own and not in conjunction with a first mortgage. When a first and a second mortgage are combined, they are called piggyback loans; piggybacks were often used to avoid private mortgage insurance (PMI).

A stand alone 2nd mortgage is a regular second mortgage signed when some equity was built. Due to large closing costs associated with a stand alone 2nd mortgage, mortgage brokers will not offer them as it will be difficult for them to pay for the cost of the loan, especially for loans smaller than $70,000. You may be told to go to a credit union if you need only a small stand alone 2nd mortgage.

Piggybacks with 2nd mortgages are common because additional closing costs are very small and PMI is avoided. Both brokers and direct lenders do piggybacks, as they don't even need to charge as much for the 2nd mortgage - the additional work is minimal. Actually, lenders and brokers do prefer doing piggybacks with a 2nd mortgage rather than a stand alone second.

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