A second mortgage can be taken out on your home to make home improvements or pay off debt etc. You must first have a home appraisal that determines how much your home is worth. You can then determine how much you owe on your home. These two numbers are then subtracted to give you a number that represents the equity you have in your home. A second mortgage can be made on the home based on your equity available. The second mortgage lender then becomes a second lienholder on your home. You make monthly payments on this mortgage just like you do your primary mortgage and if you ever sell your home this mortgage must be paid off along with the first to obtain a clear title.