| If you are a homeowner in need of an equity loan, but | | | | payment amount at regular intervals. This means your |
| do not wish to refinance your existing mortgage, you | | | | monthly payment will almost always go up when the |
| have the choice of an equity line of credit or a second | | | | lender resets the loan. Another disadvantage of this |
| mortgage loan. Each option has advantages and | | | | type of loan is the ease of access provided by the |
| disadvantages over the other. Here are several | | | | debit card. This ease of access could tempt you to |
| suggestions to help you decide which home equity loan | | | | spend more money than you had intended. |
| type is right for you. | | | | Second Mortgage Loans |
| Home equity loans come in two flavors: second | | | | Second mortgage loans have many advantages over |
| mortgage loans and home equity lines of credit. | | | | equity lines of credit. These loans come with fixed |
| Depending on your reasons for borrowing and the | | | | interest rates and allow you to borrow a specific |
| amount you need for the loan, choosing the right home | | | | amount without the temptation to overspend. Second |
| equity loan for your situation could save you thousands | | | | mortgage loans are ideal for homeowners that want |
| of dollars. Here are the pros and cons of both loan | | | | to consolidate their bills into one low payment. When |
| types. | | | | you take out a second mortgage for this reason, it is |
| Equity Lines of Credit | | | | important to remember that debt consolidation does |
| Choosing a Home Equity Line of Credit, or HELOC, | | | | not eliminate your debts; it simply moves it around to |
| gives you the greatest amount of flexibility. If you are | | | | make it easier for you to repay. You gain a tax |
| using equity for renovations to your home, an equity | | | | advantage with home equity loans, the interest you |
| line of credit offers the flexibility to make sure the job | | | | pay on these loans can be deducted on your Federal |
| gets done. Home improvements and renovations rarely | | | | Income tax. |
| come in under budget; if you only planned for a fixed | | | | There are risks associated with both varieties of home |
| amount on your project, you could find yourself short | | | | equity loans. Because home equity loans are secured |
| when unforeseen circumstances arise. Equity lines of | | | | by your property, if you fall behind on the payments |
| credit offer a debit card you can use for purchases | | | | your lenders could foreclose and take your home. The |
| just like a credit card that is tied to the equity in your | | | | interest rate you qualify for on your home equity loan |
| home. | | | | will be higher than the rate of your primary mortgage |
| There are disadvantages to Home Equity Lines of | | | | because this lender assumes more risk for the loan. |
| Credit. These loans typically come with variable | | | | You can learn more about your second mortgage and |
| interest rates that are higher than comparable second | | | | home equity loan options by registering for a free |
| mortgage loans. Because the loans come with variable | | | | mortgage guidebook. |
| rates the lender will adjust the interest rate and | | | | |