A Second Mortgage Vs. A Home Equity Loan

If you own your home and need a loan for whatever reason you
have probably considered a second mortgage or a home equity loan
to help you pay your bills, buy a new car, or pay for some other
investment. However, you probably don't know whether a second
mortgage is better or worse than a home equity loan for your
particular situation. However, don't despair because there are
some tips that will help you decide whether a second mortgage or
home equity loan is for you.

Second Mortgage Tip #1 One Time Expenses A second mortgage is
the preferred option if you have a one time big expense you need
to cover. Examples of this include remodeling your kitchen,
paying for a wedding, or buying a new car. In these instances a
second mortgage will probably work best for you; however this
will depend on the equity in your home and your credit score.

Second Mortgage Tip #2 Recurring Expenses If you are going to
have recurring expenses then you might not want a second
mortgage because a home equity loan will work out better for
you. The second mortgage is best for large amounts of money at
once while recurring expenses like tuition are better paid for
with a home equity line of credit.

Second Mortgage Tip #3 Repayment You will also need to consider
your ability to repay and which option will suit you best. A
second mortgage can be financed similarly to your first
mortgage, while the home equity loan can be paid back more like
a credit card. Consider your financial position and ability to
make monthly payments before applying for either a second
mortgage or a home equity loan.

If you still don't know whether a second mortgage or home equity
line of credit is for you, then talk with your lender and see
what is recommended for your equity, credit, and ability to
repay the loan.