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A Second Mortgage Vs. A Home Equity Loan

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A Second Mortgage Vs. A Home Equity Loan Powered By Docstoc
					by: Jay Moncliff

If you own your home and need a loan for whatever reason you have probably considered a
second mortgage or a home equity loan to help you pay your bills, buy a new car, or pay for
some other investment. However, you probably dont know whether a second mortgage is better
or worse than a home equity loan for your particular situation. However, dont despair because
there are some tips that will help you decide whether a second mortgage or home equity loan is
for you.

Second Mortgage Tip #1 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.

Second Mortgage Tip #2 Recurring Expenses

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.

Second Mortgage Tip #3 Repayment

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 dont 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 loan.

This article was posted on October 05, 2005

				
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