What is the difference between an Equity Line of Credit and another type of second mortgage?
(back to top) An Equity Line of Credit is money in an account that can be used as you need it. You can use any portion of it at any time and pay it back at any time. The interest rate is usually variable and is tied to the prime rate. Other types of second mortgages, such as the Home Equity Loan and 125 percent High LTV loans are simple interest products. You borrow a lump sum and pay it back over a period of years with interest. The interest rate for these products is fixed.
A HELOC is a secure line of credit using the available equity in the applicant’s residence as collateral. HELOC stands for Home Equity line of credit. The interest rate is usually variable and is tied to the prime rate. A second mortgage is a mortgage that is in second position to the first mortgage.
An Equity Line of Credit is money in an account that can be used as you need it. You can use any portion of it at any time and pay it back at any time. The interest rate is usually variable and is tied to the prime rate. Other types of second mortgages, such as the Home Equity Loan, and 100% are simple interest products. You borrow a lump sum and pay it back over a period of years with interest. The interest rate for these products is fixed.
An Equity Line of Credit is money in an account that can be used as you need it. You can use any portion of it at any time and pay it back at any time. The interest rate is usually variable and is tied to the prime rate. Other types of second mortgages, such as the Home Equity Loan, 110% Reward, and 125% Freedom loans are simple interest products. You borrow a lump sum and pay it back over a period of years with interest. The interest rate for these products is fixed.
