Are second mortgages used to finance payments of first mortgages?

Example:


John's first loan is $100,000. The payments are $800 (including interest) each month.


If John used a second mortgage, is it typically used to pay the monthly mortgage payments, in this case $800? How does it work?Are second mortgages used to finance payments of first mortgages?
No, having two mortgages is used to split the value of the total loan, making it easier to apply for both of them. For example, I purchased my home for 130,000 dollars, but couldn't get a loan for the full amount. I qualified for a 100,000 principle+interest loan, and put money down on a 30,000 dollar interest only loan to meet the full price. People who take out second mortgages after a purchase do so based on equity (the difference between the value of the home and the mortgage) to pay bills, or get extra money for renovations, etc.





Edit:: If you used the second loan to make payments on the first loan, you're still liable for the total cost, making it meaningless. You're basically throwing away money and inflating the price you're paying for your home, with no real end benefit. The idea behind real estate is to buy low, and sell it for more or at least equal to what you paid for it, if you ever sell it.Are second mortgages used to finance payments of first mortgages?
No, you can't get a 2nd loan to pay your mortgage.





A 2nd mortgage is simply a 2nd loan that has the house as collateral. The combined debt must be less than the total value of the house.





A 2nd mortgage can be used for many things. Sometimes two mortgages are taken out when the home is first sold. Other times, a homeowner will take a 2nd mortgage to get money for upgrades or for something else, but you can't just use it to make the payments on your other mortgage.
Second mortgages are normally used for the down payment of the initial loan. Or for remodeling a home or buying a car. They are used as a way of using the mortgage for a tax write off or for a cheaper interest rate or if taken out at the time of the first mortgage to finance the down payment. This is normally not a good idea because if you can't afford a down payment, you probably should not be buying the house.
If the second is a home equity line of credit (HELOC) it can be used for anything, including making the payments on the first mortgage. But as Robin points out, you are going deeper in debt because the payments on the first includes interest as well as the principal. So with each payment you make using the second, your debt goes up by the amount of the principal and interest of the first loan, but the debt of the first only goes down by the principal amount. As a result, John will be deeper in debt than he was before.





A better choice is to use the HELOC to pay off the first in its entirety. Whether this makes sense or not depends upon the interest rates of the HELOC vs. the first. That's what I did. I got a much lower interest rate on the HELOC and paid off the first with it. The lower rate allowed me to pay off more of the principal fasther than I could afford if I had kept the first mortgage. It worked out well for me. But it may not be practical in the current environment. You'll have to run the numbers and see.
2nd loans are not a down payment on your home it is taken out for you not need a down payment which makes your 1st loan 80% of the value of your home and the 2nd 20% of your home unless you used FHA you should not have mortgage insurance either





John has a Heloc which is a equity line of credit and is used like a credit card but he is paying on that every month as well
Second mortgages are usually used for a down payment.
No......You would be paying double interest on the same 800 bucks...If someone has to do that they cant afford that house in the first place