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Second Mortgage Versus Home Equity Loan
Are you debating between a second mortgage and a home equity loan? Let us put all the information together for both and let me show you whether a second mortgage or a home equity loan is right for you.
A second mortgage tends to have a pretty high interest rate and I like to refer to it as a band aid loan. That means it is used to fix a situation temporarily until a more permanent solution can be found. Second mortgages can be taken out all the way up to 125% of the value of your home, but I would only recommend a 125% loan if you are in desperate need of the money.
Second mortgages are a little more dangerous than a home equity loan and usually involve more fees. I recommend a second mortgage for desperate situations or situations where a lot of high interest credit card debt is being paid off.
A home equity loan on the other hand is often referred to as a home equity like of credit. This is usually a revolving line of credit much like a credit card, but with a much lower rate. Sometimes you can get a home equity loan for a lower rate than your first mortgage.
Home equity loans are used more for personal needs, such as, a vacation, buying an investment property, starting a business, or a number of other important, but not desperate reasons. You normally have to have a better credit score to get a home equity loan versus a second mortgage.
I hope you have found this article to be helpful in your decision making process. If there is one other piece of advice I can give you it is to compare and shop around before settling on a company and their program. It is important to make sure you get the best deal, after all we are talking about your money.
Start your search for the best deal on your second mortgage, home equity loan, or even on a first mortgage refinance today. Get an online quote form multiple companies and let them compete over you. Go to:
Online Mortgage Quote
More Useful Resource and Updates on federal home loan mortgage association
- Banks Adjusting Home Equity Loans (FOX 31 Denver)
During this financial crisis, have you checked your home equity line of credit? How about your business line? You might be shocked to learn that banks are now taking back money they've already loaned...in some cases, without warning. FOX 31's Heidi Hemmat reports.
- UK house prices fall 2.6% in November (Financial Times)
Average UK house prices fell by 2.6 per cent in November from the previous month, according to the Halifax house price index published on Thursday, wiping out gains on home equity earned since July 2005.
- NJ man gets 12 years in bank fraud scheme (phillyburbs.com)
TRENTON, N.J. - A New Jersey man has been sentenced to 12 years in federal prison for his role in a scheme involving millions of dollars in fraudulent home equity and business lines of credit.
- Five Home-buying Myths (Carteret County News-Times)
(ARA) - As first-time homebuyers grow curious about the home-buying process, they often turn to friends and family for advice about purchasing a home. While these sources can provide useful tips and information, they also may perpetuate some common home-buying myths.
- Pioneer Natural, Cabot Oil, Casey?s, Copart: U.S. Equity Movers (Bloomberg)
Dec. 4 (Bloomberg) -- The following companies had unusual price changes in U.S. trading . Stock symbols are in parentheses, and share prices are as of 4 p.m. in New York.
- Opening the tap on home equity (Austin American-Statesman)
Borrow before credit line is frozen, some suggest. Many homeowners who have taken out home equity lines of credit have learned in recent months that these loans are not as useful as they initially seemed.
- Pioneer Natural, Cabot Oil, Casey?s, Copart: U.S. Equity Movers (Bloomberg)
Dec. 4 (Bloomberg) -- The following companies are having unusual price changes in U.S. trading . Stock symbols are in parentheses, and share prices are as of 3:25 p.m. in New York.
- Bernanke urges action to halt foreclosures (Reuters via Yahoo! News)
Federal Reserve Chairman Ben Bernanke on Thursday urged more aggressive steps to halt home foreclosures and said government-funded programs could help strapped homeowners.
- Expert: Don Taylor, Ph.D., CFA, CFP (Bankrate.com)
Dear Dr. Don, I have a $170,000 home equity line of credit with Bank of America that is currently completely drawn. I have $100,000 in my bank account and would like to pay down my HELOC with these funds.
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