Second Mortgage or Home Equity Loan
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.
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.
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
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