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Types of Second Mortgages

There are primarily two types of second mortgages: Home Equity Loans and Home Equity Lines of Credit (HELOCs).

1. **Home Equity Loans**: These are fixed-rate loans where you receive a lump sum upfront and repay it over a set term. This option is ideal for those who need a specific amount of money for a one-time expense.

2. **Home Equity Lines of Credit (HELOCs)**: These function more like credit cards, where you have a credit limit based on your home's equity and can borrow as needed. HELOCs typically have variable interest rates, which can fluctuate over time.