Second Mortgage vs Home Equity Loan: Side By Side
Weighing the benefits between a second mortgage versus a home equity loan requires an understanding of the differences. While the terms are closely related, there are a few key points that separate them.
Second Mortgage
Home Equity Loan
The option you choose will depend on your creditworthiness, spending habits and financial needs. Often, one-time purchases are better handled through second mortgages and recurring payments are suited for home equity loans. Your ability to control your spending on a credit card should also be considered. Speak with your lender to see which option will be less expensive based on these factors.
Second Mortgage
- More similar to a mortgage
- Based on the value of the home
- Fixed sum of money given up-front
- Repaid on a fixed payment schedule similar to a mortgage
- 5 to 30 years at a fixed rate
Home Equity Loan
- More similar to a credit card or line of credit
- Based on your current equity in a home
- You determine how much of your equity line you use each day or month like a credit card
- Monthly payments are due based on your expenditures
- Rates may be adjustable while the credit line is open
The option you choose will depend on your creditworthiness, spending habits and financial needs. Often, one-time purchases are better handled through second mortgages and recurring payments are suited for home equity loans. Your ability to control your spending on a credit card should also be considered. Speak with your lender to see which option will be less expensive based on these factors.
Student Loans
- 3 Factors that Contribute to Fluctuating Interest Rates on Student Loans
- What are the Consequences of Defaulting on a Federal Student Loan?
- What Happens when You Default on a Private Student Loan?
- Federal vs. Private: Comparing Student Loan Interest Rate
- Can You Get a Private Student Loan with No Cosigner?