You may have a lot of equity in your home and would like to leverage it to make repairs or take cash out for other purposes. But, you have a low rate mortgage and do not want to refinance your home at higher rates. Well, you can keep that low rate mortgage and take the cash out with a second mortgage, i.e. a home equity loan or a home equity line of credit.

Home equity loans are fixed rate loans. You have to take the entire amount of the loan at closing. Payments are to principal and interest.

Home equity lines of credit are similar to a credit card, but they are secured by your home. You can borrow against it, pay it back, borrow against it again, pay it back, etc. You don’t have to take the full line amount at closing, and you only have to pay back the amount you borrowed. Payments are usually interest-only for the initial part of the loan term, and then become principal and interest. The interest rate is variable, and is usually tied to the prime rate +/- a margin.

There are advantages and disadvantages to both products. If you are looking to take money out of your home, but don’t want to refinance the first mortgage, contact us about a second mortgage and we can go over your options.