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Home Equity Line of Credit

Second Mortgage Overview

A home equity line of credit is a very popular kind of second mortgage.  Depending upon your situation, the interest on a home equity line of credit could also be tax deductible where the interest on personal loans or credit card debt is not because your home is the collateral for the debt.

However,  because your home is the collateral for the home equity line of credit, you may be at risk for losing your home if you cannot make payments.  If you are not willing to make line of equity payments or take these risks, you might consider a reverse mortgage.  

A home equity line of credit can provide you with extra cash quickly and in large volumes, up to the equity you have built in your home or a portion thereof.  A home equity line of credit works much like a checking account with you being able to effectively write a check against the available loan balance.  As such, this kind of loan essentially allows you to write your own loan on a moment's notice, just about any time that you want it.  

If and when you sell your house or you die and the home goes to your family, lending institutions will require that the equity line of credit be paid off at that time.  If you sell your home and buy another one, your equity line of credit may be able to be transferred, but essentially, it will still be a new loan with new home being collateralized.  

Aside from the obvious advantages of using your home to obtain needed funds and being able to write of the interest, second mortgages also have an additional advantages of having lower interest rates and keeping those rates fixed.







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