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Quite often I hear from clients that another mortgage company or bank tells them that 2^nd mortgages do not exist.  This is usually because that company is not approved to do them or chooses to not do them.  But I promise they do exist.  Why would a buyer choose to do a 2^nd mtg:

• Avoid mortgage insurance.  Many times avoiding mortgage insurance is beneficial for a couple reasons: a lower payment and the interest is tax deductible.  Over the long term mortgage insurance is not tax deductible.
• They have a home to sell and do not have the 20% down payment.  So they take a 2^nd mortgage and pay it off after their home sells. 
• Avoid a Jumbo Loan.  Jumbo loans offer higher rates.  The buyer could break their mortgage into 2 mortgages.  The first mortgage of $417k and a 2^nd mortgage the remainder.  This would allow them to avoid that higher Jumbo Rate. 
• The 2^nd mortgage maybe more flexible then the underwriting of a Mortgage Insurance Company

Now for things to keep in mind for 2^nd mortgages:

•·         The client must have very good credit(680+)

•·         The rates range from 6.99% to 8.99%(depending on credit score, down payment, etc)

•·         If they plan on paying the 2^nd mortgage after selling their house there is a 1% penalty(of the loan amount)

•·         The 2^nd mtg can be from $10k to $100k

Please keep in mind this is for Texas Mortgages and may differ in your state.