1. What you describe is NOT a second mortgage. The correct term is ‘cash out refinance’.
2. Without knowing the CURRENT home value AND his income, we can’t even guess if he would be approved.
3. You would do this the same way you would do ANY refinance. Contact a mortgage lender and tell them what you want to do.

Steven D: He will NOT be approved for a 100% refinance. At this time, they simply don’t exist. The banks own too many homes specifically because they made such loans.

Assuming the house appraises at $125,000 or more, he just needs to call his bank about re-financing and taking out cash. If his bank says no, check the yellow pages or internet for a mortgage broker in your area.

The only trick will be the appraisal has to come in above what your friend wants to borrow and also above the percent of value the lender will allow (a $125,000 appraisal would put equity at 0% and many banks today are much tougher with 100% loans.

Your friend will probably also have to pay closing costs for re-recording the title, etc.

What’s the home worth? Can your friend make the payments on the new debt?