What Is a Puisne Mortgage?
Puisne mortgages let you pull cash out of your house.
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Typical Puisne Mortgages
Any time you borrow money against your house through something other than a first mortgage, you're taking out a puisne mortgage. Second mortgages, home equity loans, lines of credit and home improvement loans that use your house as collateral qualify as puisne mortgages. While they have a claim to your home if you default, they have to wait in line behind your first mortgage holder's right to it.
Homeowners may use their ownership rights to get something else instead. When you borrow money, you pledge a portion of your rights to your home to your lender, giving the lender the security it wants to feel safe lending money to you. If you
enter into a relationship with multiple lenders, each one has a right to your property. Generally, a lender or lienholder's right is determined by when they filed their lien. The first entity to claim rights to your property gets their claim satisfied, and then anything left over goes to the next lienholder. Puisne mortgages are left to take whatever remains after the first, senior, mortgage.
Benefit of Puisne Mortgages
Taking out a puisne mortgage lets you turn the equity in your property into cash. You can then use that money to consolidate debt, fix up your home, buy a boat, or do whatever else you want. Puisne mortgage loans are usually much less expensive than other types of debt that aren't secured by your home. Their interest may also be tax-deductible.
Drawbacks of Puisne MortgagesSource: people.opposingviews.com