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As a general, when taking a real estate as a guarantee in the first mortgage, it must consider that the value of the loan will be lesser than the value of the real estate. Suppose that the loan taken is equal to 300,000 $, then the real estate value must be higher, say it is equal to 400,000 $. In this case, the real estate is accepted and the mortgage transaction will be made. It must understand that the difference between the two previously mentioned amounts, the 100,000 $ is named a real estate equity. Suppose that the borrower faces urgent expenses, such as medical or otherwise, he may ask the lender to give him another loan, at the guarantee of the real estate equity, (100,000 $). In this case, it will be called the second mortgage.

Of course, the second mortgage will be proceeded at the same manner of the first mortgage and with a mutual agreement between both parties. Yet, there are many advantages and disadvantages of this operation. As to the advantages, the borrower will get the utmost benefits from his real estate, and the first high interest ratio may be canceled as well. Nevertheless, regarding the disadvantages of this transaction, it must note that terms and conditions of this second may be higher than the first one. The lender will initially ask for confirming the good status of the borrower finance before proceeding. In addition, it may be difficult to understand the mortgage calculators in this manner. Thus, a guidance of mortgage companies will be advised.