Home equity loans and HELOCs — both of which are commonly called a second mortgage — allow you to borrow against the value of your home.
Many people use home equity products to pay for remodeling projects or to consolidate high-interest debts.
Home equity loans come with a fixed interest rate, fixed monthly payment, and fixed repayment timeline. This makes them a predictable option for borrowers who don’t like surprises.
HELOCs, on the other hand, come with variable rates and let you borrow as you need — they’re a form of revolving credit. In fact, they function a lot like a credit card, the main difference being that you’re using your home as collateral.
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Even if you have no desire to prolong your mortgage payments or add to the debts you have, there are plenty of good reasons to borrow against the equity in your home — commonly called a second mortgage.
Interest rates are typically much lower than other borrowing options, for example, which means you could be a lot better off if your alternatives are a personal loan or a credit card. Since the loans behind a second mortgage, home equity lines …read more
Source:: Businessinsider – Finance