Lines of credit vs. traditional second mortgage loans
If you are thinking about a home equity line of credit, you might also want to consider a traditional second mortgage loan. A second mortgage provides you with a fixed amount of money repayable over a fixed period. In most cases the payment schedule calls for equal payments that will pay off the entire loan within the loan period. You might consider a second mortgage instead of a home equity line if, for example, you need a set amount for a specific purpose, such as an addition to your home.
In deciding which type of loan best suits your needs, consider the costs under the two alternatives. Look at both the APR and other charges. Do not, however, simply compare the APRs, because the APRs on the two types of loans are figured differently:
- The APR for a traditional second mortgage loan takes into account the interest rate charged plus points and other finance charges.
- The APR for a home equity line of credit is based on the periodic interest rate alone. It does not include points or other charges.
Introduction to Home Equity Line of Credit
What is a home equity line?
What should you look for?
How will you repay your home equity plan?
Disclosures from lenders
Home Equity Line of Credit Definitions
Information provided in Home Equity Lines of Credit section is adapted from a free consumer guide "When Your Home Is On the Line: What You Should Know About Home Equity Lines of Credit" to review and order a free copy of this guide click Here!.
Home Equity Loan Resources
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