Final answer:
A second mortgage is a secured loan using real estate as security, offering lower interest rates and increased borrowing potential.
Explanation:
A second mortgage is a type of loan that uses real estate for security, where the borrower pledges their property as collateral. This type of loan allows borrowers to access funds by leveraging the equity in their home, with the real estate serving as a guarantee for repayment.
Secured loans like second mortgages typically offer lower interest rates compared to unsecured loans due to the reduced risk for the lender. In case of default, the lender can seize the property to recover the outstanding amount, making it a less risky form of lending.
The use of real estate as security in second mortgages provides lenders with assurance and increases the likelihood of approval for borrowers, making it a common choice for individuals looking to borrow against the value of their property.
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