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Whats the difference between a Home Equity line of Credit and taking out a Second Mortgage?


Whats the difference between a Home Equity line of Credit and taking out a Second Mortgage?

A Home Equity line of Credit(HELOC) is a type of mortgage program and a Second Mortgage describes the loan position.

Often HELOCs are used as 2nd Mortgages, but there are other 2nd mortgage programs to choose from.

A HELOC is based off of the Prime Rate index, which is derived from the Fed Overnight Funds Rate (Alan Greenspan stuff - ex head of Fed).

2nd Mortgages mean just that... they are in position behind another mortgage. In the event of foreclosure, liens are paid off according to their position. 1st mortgages would have to be fully paid before any proceeds would go to paying off a 2nd mortgage. Source(s): Me, I'm a lender in FL.

Also, here's my real estate 1031 exhange website: http://www.nnnstore.com soon to be http://www.1031store.com
To your pocketbook, essentially the same.
A lin of credit is like a checking account (you will probably even get checks). A second mortgate is just some money up front and then you pay it back, you have no provision to get more money if you need it.
put it in a purse
purse
The HELOC loan is essentially the same as a second mortgage. The only big difference is the HELOC will extend future funds to you by allowing to "go back to the well" a few times till the bank has a nice "chokehold" on your property.

Remember the bank is NOT your friend. Their main purpose of giving you the money is to try to "get back more than it gave".

To quote a good friend of mine. You'll see more Jags and Mercedes in employee parking lot of a bank than you ever will at a car dealership. (And the car guys supposed to be the crooks).
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