Home Equity

About Second Mortgages

Fixed
This is normally a fixed rate with a period ranging from 10 to 30 years. Fixed rate second mortgages have a rate that is normally higher than a first mortgage loan and is normally tied to the Fed Prime Rate.

Balloon Mortgage
The most common type of fixed rate second is a balloon mortgage. Typically a balloon mortgage has a fixed rate for a set number of years. The terms of the fixed rate could be for 10 or 15 years. At the end of the term the client has the option of paying off the remaining balance as the payments are normally amortized over a 30 year period or you can refinance the remaining balance into a new loan.

HELOC - Home Equity Line of Credit
The key word is line of credit. A HELOC is typically an adjustable rate mortgage tied the the Federal Reserves Prime Rate. It can adjust up or down monthly depending of the Prime Rate is adjusted (see Historical Chart). Normally you have the option of paying just interest only or principle and interest.