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Three Types of Second Mortgage Home Loans

A second mortgage home loan is any loan that you get from a mortgage lender in addition to the first mortgage. This is an option that many individuals choose when they need fast access to cash. The cash from second mortgage home loans is typically used to pay off high credit card debt, pay for college, or to pay for some other major expense. It is a good option for responsible individuals with a good amount of equity in their homes. A second mortgage home loan provides fewer underwriting guidelines and requires less paperwork than refinancing. This is another reason why it is an attractive borrowing option. There are three types of second mortgage home loans. The traditional second mortgage allows quick access to a lump sum of cash. Borrowers may choose a fixed or adjustable rate mortgage. In addition, the repayment terms on the second mortgage home loan may last anywhere from five to twenty years. An individual may not borrow more than eighty percent of his homes value. Closing costs and other lender's fees are included in the loan. The home equity loan is another type of second mortgage home loan. It is very similar to the structure of a traditional home loan. It also provides access to a lump sum of money. However, most of these are adjustable rate mortgages only. Though, many lenders are willing to waive closing fees. The final type of second mortgage home loan is the home equity line of credit. This type of loan lets individuals borrow limited amounts of money at a time. There is no lump-sum borrowing. Once that particular amount is paid, the person may borrow more money. As with the other two types of second mortgage home loans, the individual's total borrowing may not exceed eighty percent of the home's value. Closing costs are also included in this loan.