WOODBRIDGE, VA, Jan 08, 2018—If you're looking into further financing options on a home you already own, you may have heard the terms "second mortgage" and "home equity line of credit." But what are they, and how are they different?
"A second mortgage is a loan against the equity in your home," explains Stacy Magid, Real Estate Professional of Century 21 New Millennium. Financial institutions will generally let you borrow up to 80 percent of the appraised value of your home, minus the balance on your original mortgage.
You may incur all the fees normally associated with a mortgage, including closing costs, title insurance and processing fees.
"A home equity loan, like a second mortgage, lets you tap up to about 80 percent of the appraised value of your home, minus your current mortgage balance," says Magid. But because it is set up as a line of credit, you will not be charged interest until you actually make a withdrawal against the loan, although you will be responsible for paying closing costs.
The withdrawals can be made gradually as you begin to pay contractors and suppliers for handling your remodeling project.
"The interest rates on home equity loans are usually variable," says Magid. Of particular importance: make sure you understand the terms of the loan. Magid continues: "If, for example, your loan requires that you pay interest only for the life of the loan, you will have to pay back the full amount borrowed at the end of the loan period or risk losing your home."
For information on real estate, please contact Century 21 New Millennium at email@example.com, 17034919570, or Century 21 New Millennium.
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Century 21 New Millennium
12581 Milstead Way Suite #400
Woodbridge VA 22192
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