2nd Mortgage
Home Equity Loan (HEL)
HELOC
What Is The Difference?
A Second Mortgage Home Equity Loan (HEL) is a fixed-rate, lump-sum loan secured by the equity in your home, subordinate to your first mortgage. It provides cash based on your home's value minus the primary loan balance.
Think of it as borrowing against your home's equity in a single payout, with monthly principal + interest payments over a set term (e.g., 5-30 years).
Key Features:
Lump sum: Receive all funds upfront (unlike HELOC's revolving credit).
Fixed rate/term: Predictable payments.
Second lien: Paid after first mortgage in foreclosure.
NMLS Compliance Note: This is general educational information. Second mortgages increase your total debt, monthly payments, and foreclosure risk if unable to pay — your home is collateral. Qualification requires credit check, income verification, appraisal, and sufficient equity (typically 15-20%+ after both loans). Fees, closing costs, and rates vary; compare total costs. Not suitable for everyone; risks higher DTI or credit impact. Consult a licensed mortgage professional for personalized advice. State laws and lender policies apply.
A Home Equity Line of Credit (HELOC) is a variable-rate, revolving credit line secured by the equity in your home, subordinate to your first mortgage. Draw funds as needed up to an approved limit, based on your home's value minus the primary loan balance.
Think of it as a flexible credit card against your home's equity, with interest-only payments during the draw period (e.g., 5-10 years), then principal + interest in repayment (e.g., 10-20 years).
Key Features:
Revolving credit → Borrow, repay, reuse funds (like a credit card)
Variable rate → Payments fluctuate with market rates (some offer fixed-rate options)
Second lien → Paid after first mortgage in foreclosure
NMLS Compliance Note: This is general educational information. HELOCs carry variable rate risk (payments can rise), increased debt, and foreclosure risk — home is collateral. Requires credit/income verification, appraisal, equity (15-20%+). Fees, draw limits, and balloon payments possible. Not for everyone; monitor rates/DTI. Consult a licensed mortgage professional for personalized advice. State/lender rules apply.