Perhaps you are considering tapping into your home equity to renovate your kitchen, or take care of the balance on a credit card. A fixed- or adjustable-rate loan secured by your home equity is called a "home equity loan." You'll repay the loan over an agreed period of time by making payments monthly, just like your first mortgage. You can use the phrases "home equity loan" and "second mortgage" to mean the same thing.
Getting your first mortgage is a process similar to that of a home equity loan. Your closing costs (often 2-3 percent of the loan amount) are typically lower and, although the interest rate is larger on a home equity loan, the interest can be tax deductible.
To qualify for a second mortgage, you will need a positive credit score and you must be able to provide documentation of your income. To determine your home's current value, your lending institution will ask for an appraisal of your home. To explore your home equity/second mortgage loan choices, call us at 205-941-1484.
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