2nd Mortgage or Home Equity Loan

Homeowners often group 2nd mortgages and home equity loans into the same category. While 2nd mortgages are a type of home equity loan, other equity options also fall under home equity loans. For example, when choosing a home equity loan, homeowners may opt for a home equity line of credit (HELOC). If deciding to tap into their equity, homeowners must choose the best option, a 2nd mortgage or home equity loan.

What are 2nd Mortgages?

When opting for a 2nd mortgage, homeowners receive a fixed amount of money. Similar to the initial mortgage, a 2nd mortgage has a fixed repayment period. Sometimes, 2nd mortgages are confused with mortgage refinancing; however, the two processes are very different. A refinancing creates a new home loan to replace the old, whereas a 2nd mortgage creates a second lien on the property.

Homeowners have the option of selecting a 2nd mortgage with a 15 or 30 year term. The majority of 2nd mortgages have fixed rates. Yet, it is possible to obtain a second mortgage with a variable or adjustable rate.

Before applying for a 2nd mortgage, bear in mind that these mortgages tend to have a slightly higher rate than 1st mortgages. Similarly, rates are determined by an applicant's credit history.

What is a Home Equity Loan?

Home equity lines of credits are not loans. Moreover, homeowners do not obtain a fixed sum in one lump payment. Instead, these credit accounts consist of an open line of credit. This is comparable to a credit card. In fact, debit or credit cards are often used to withdraw funds from a home equity line of credit.

The credit limit on a home equity line of credit is based on the appraised value of your property. Usually, lenders will not approve a line of credit for the full appraisal value. Rather, homeowners with a good credit history may be able to obtain a revolving credit for up to 75% of the home's worth.

Home equity lines of credit benefit homeowners who want the freedom of withdrawing funds on an as needed basis. On the other hand, second mortgages are generally more suited for individuals who require a one-time lump sum of money.

Go to http://www.homeequitywise.com for more information about Second Mortgages and Home Equity Loans.

Home Equity News:

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Home equity loans drying up for some - Business - Personal finance ...
Like many homeowners during the housing boom, Lynnette Madden and her husband decided to open a home equity line of credit about a year and a half ago as ...
Americans' home equity near a record low - Business - Real estate ...
WASHINGTON ? Falling U.S. home prices have shrunk equity so much that the proportion of their homes that Americans actually own is near its lowest point ...
Home equity lines have dried up across U.S. - Business - Personal ...
Home equity lines have dried up across U.S. As home prices collapse, banks cut off credit, further souring the economy Below:
Late payments for home equity loans rise - Business - Real estate ...
WASHINGTON ? Late payments on home equity loans climbed to a 1½-year high in the opening quarter of this year, while delinquencies on credit card bills ...
Retirees no longer count on home equity - Business - Personal ...
Many Americans have recently found themselves changing retirement plans after losing a substantial amount of home equity as the housing market and the ...
Equity in Americans? homes falls to historic low - Business ...
NEW YORK ? The equity Americans have in their most important asset ? their homes ? has dropped to its lowest level since the end of World War II ...
Students get creative to pay off loans - Business - Personal ...
Lines of credit typically work like a credit card, with a limit and a revolving balance: the average home-equity line of credit currently has an interest rate ...
Use of home equity hits a four-year low - Business - Real estate ...
Use of home equity hits a four-year low Freddie Mac report cites falling residence values, stricter lending standards Below:
Ford, Toyota are pinning their hopes on China - Business - Autos ...
NEW YORK ? Ford Motor Co. plans to build a new assembly plant in China ... $30K home equity loan FICO: 5.75%
Cities sue, invest to stop foreclosures - Business - Real estate ...
These stem from lost tax revenue and jobs as well as slower consumer spending that come with home equity declines, and don?t even include the financial toll ...

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