HELOCs and Second Mortgages: Which One Should I Choose? -

Home
>
Mortgage Refinance
>
HELOCs and Second Mortgages: Which One Should I Choose?

HELOCs and Second Mortgages: Which One Should I Choose?

Whether you need some extra cash to pay off some credit card debts, or to make some home improvements, home equity lines of credit or second mortgages can be great ways to get started.

Many people looking to borrow money often opt for home equity line of credit, or HELOCs, for short. They are a tempting first choice, because they can often give you the much needed cash at a low interest rate. Another advantage to taking out an HELOC, or a home equity line of credit, is that they may provide the borrower with a certain tax break, but you would need to verify this with your lender or accountant.

One drawback to HELOCs, however, is the fact that borrowers are expected to put their homes up as collateral. So, it is important that you think this decision through, before finalizing the loan, because you may be at risk of losing your home- and its equity- if you are late or cannot make your monthly payments. Finally, if you decide to sell your home, must HELOCs will require that you pay off the balance, before completing the sale.

You can also take out a second mortgage, if you need some cash. Like the HELOC, second mortgages usually pay out the loan in one sum, which makes it a convenient option. Second mortgages also have the added advantage of having set payments, at a fixed interest rate. Many companies will charge a lending fee, which will vary from company to company. These fees are usually based upon a percentage of the loan and are frequently referred to as 'points.' If one fee seems too high, don't be afraid to shop around to find one which is better suited to your budget.

Remember, however, that adding a second mortgage to your home carries with it certain risks. Like with home equity lines of credit, you could lose your home, if you fall behind in the payments.

Mark Lambie is the founder of The Loan House a website that allows consumers to quickly and easily get online mortgage quotes and mortgage information.

In The News:

Mortgage Refinancing Points to Consider
Corsavoo.com, France - Sep 6, 2008
Though it is probable to attain a no-cost refinance mortgage from a mortgage loan lender, remember that these lenders are out there, trying to earn a ...

Wall Street Journal
US mortgage takeover promises no quick housing fix
guardian.co.uk, UK - 3 hours ago
By restoring confidence it should also bring down mortgage rates so previous home buyers can refinance into cheaper loans and new ones can enter the market. ...
Video: Feds Take Over Mortgage Giants AssociatedPress
As rescue looms, questions raised Boston Globe
Fitch Affirms Fannie Mae & Freddie Mac's 'AAA' IDR; Lowers Pfd ... MarketWatch
BloggingStocks - New York Timesall 4,899 news articles

Understanding Mortgage Refinance Rates
SheKnows.com, AZ - Sep 4, 2008
Mortgage refinance rates are the lowest rates, homeowners can get when trying to refinance their mortgages. Simple, isn’t it? Maybe so, but obtaining the ...

The Associated Press
Fannie, Freddie deal helps some borrowers, not all
The Associated Press - 29 minutes ago
If fees were eliminated, we would see more qualified borrowers being able to refinance or qualify for a mortgage," said Marc Savitt, president of the ...

TopNews
Troubles spread to prime Md. mortgages
Baltimore Sun, United States - Sep 6, 2008
... interest-only mortgage with an adjustable rate. The rate kept rising until it was just too much, and he was told he couldn't refinance because the value ...
Report says 3.1 percent of Conn. mortgages overdue Newsday
Home loan troubles break records again The Associated Press
Foreclosures, Overdue Mortgages Increase Again Wall Street Journal
Bloombergall 682 news articles

New York Times
Risky mortgages threaten to keep housing market down
Detroit Free Press, United States - 16 hours ago
They can't refinance because housing prices have nose-dived, and lenders are demanding full documentation of income and assets. Losses on liar loans could ...
Fannie, Freddie fallout felt Asbury Park Press
all 9 news articles

KARK
Full Story
KARK, Little Rock - 10 minutes ago
If you're looking to buy a new house or refinance, then there may be a tightening or inability to do the mortgage you would like," financial professional, ...

Houston Chronicle
Baytown woman sues lenders, says she was a victim of predatory ...
Houston Chronicle, United States - Sep 4, 2008
Nanette Lewis refinanced her mortgage to get peace of mind. Instead, she says, she got a bait-and-switch, predatory loan and heartbreak. Now far less naive, ...

Mortgage Refinance Options to Think About
3x24 - Your Newspaper and News Magazine, Germany - Aug 26, 2008
Very few people in the world can afford to purchase a home in one payment so the world of mortgages and mortgage payments ‘came to be’. Mortgage refinance ...

What’s A Divorce Got to Do with Your Mortgage Refinance?
Corsavoo.com, France - Aug 25, 2008
When you’re the aggrieved partner, you silently wish that things will suddenly take a better turn, especially with an unpaid mortgage. Refinance plans have ...

mortgage refinance - Google News