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Mortgage Loans by Elena Acosta
Second Mortgage
A second mortgage is a loan that is taken out against a property that already has an existing mortgage. It’s called a “second” mortgage because it’s subordinate to the first mortgage, meaning that the first mortgage takes priority in case of default or foreclosure. Second mortgages are typically used to borrow a lump sum of money and are often used for specific purposes such as home renovations, debt consolidation, or large expenses like medical bills or education costs.
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Home Equity Line of Credit HELOCs
Home Equity Line of Credit (HELOC) is a revolving line of credit that is also secured by the equity in a home. HELOCs allow homeowners to borrow up to a certain percentage of their home’s appraised value, minus the amount owed on their first mortgage. Unlike a second mortgage, a HELOC works more like a credit card, where borrowers can draw funds as needed up to a predetermined credit limit and only pay interest on the amount borrowed. HELOCs are commonly used for ongoing expenses, such as home improvements or as a source of emergency funds.
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