See whether a home equity loan or a second mortgage loan would benefit you most. Home equity loan and second mortgage loan is quite similar, and sometimes borrowers get mixed up by the two. East West Mortgage provides you a brief detail on each of the second mortgage loans.
Home Equity Loan
Home equity loan is a type of second mortgage. Home equity loan allows you the relief of not as many origination fees, finance charges and closing costs. The equity you have built up in your home may serve as collateral on the mortgage loan. Payments on home equity loans are made over a period of time according to a fixed schedule. A home equity loan can be either of the following: fixed rate mortgage or adjustable rate mortgage. Borrowers usually apply for a home equity loan when they are looking to get money in large amount. A great benefit of the home equity loan is the home equity loan rate charged is usually tax deductible. You can use the funds from a home equity loan to pay off the first mortgage, pay off bills, repair or renovate your home, emergency expenses and much more.
Second Mortgage
If you ever were to default and the lender needs to be repaid, the second mortgage is second in line. Since this is the case, you will be paying higher fees and have a slightly higher interest rate than a first mortgage. Payments are over a long period of time with a fixed schedule. Borrowers usually take out a second mortgage for various purposes such as: home improvements, debt consolidation, emergency expenses and so much more.
If you have other questions or concerns please feel free to contact one of our knowledgeable mortgage lenders. We have the tools and information to provide you answers to any questions you may have.
