Loans Type:
Second Mortgage
A second mortgage is a loan that is taken out against a property that already has an existing mortgage. It’s called a “second” mortgage because it’s subordinate to the first mortgage, meaning that the first mortgage takes priority in case of default or foreclosure. Second mortgages are typically used to borrow a lump sum of money and are often used for specific purposes such as home renovations, debt consolidation, or large expenses like medical bills or education costs.
Vs
Home Equity Line of Credit HELOCs
Home Equity Line of Credit (HELOC) is a revolving line of credit that is also secured by the equity in a home. HELOCs allow homeowners to borrow up to a certain percentage of their home’s appraised value, minus the amount owed on their first mortgage. Unlike a second mortgage, a HELOC works more like a credit card, where borrowers can draw funds as needed up to a predetermined credit limit and only pay interest on the amount borrowed. HELOCs are commonly used for ongoing expenses, such as home improvements or as a source of emergency funds.