A home equity line of credit is a great way to access the tappable equity in your home. A home equity line of credit is a mortgage. A home equity line is also know as a second mortgage.
What Is A Second Mortgage?
A home equity line of credit uses your home as collateral. A home equity line is not a personal loan or a credit card. Since your home is used as collateral there is a lien on your property. With your home is used as collateral, an equity line will offer better interest rates compared to a personal loan or credit card.
If there is a primary mortgage on a property, the home equity line takes second lien position. Since the equity line is generally in second line position is is referred to as a second mortgage. If a home is owned free and clear, you can still take out a line of credit. A line of credit can be the only lien on the property.
What Can A Home Equity Line of Credit Be Used For?
There are no restrictions on uses for the funds on your line of credit. One of the most popular uses are for debt consolidation. The benefit of a home equity line is that it will offer a lower interest rate than most credit cards. Often you can greatly reduce your total monthly payments by consolidating credit cards onto a home equity loan. A client can save thousands over the life of the loan with a home equity consolidation loan.
Another popular use for a home equity line if for home improvement. Many clients use a home equity line to update and refresh their homes. An equity line can be used for small and large repairs that have been put off for too long. Maybe it is time to put in that pool you have always wanted; or to put on that addition you have been considering.