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Home Equity Loan (Second Mortgage) A closed-end second mortgage can help you use the equity in your home to better manage your debt. The interest rate is fixed and the amount of the loan is determined at the time of application. Borrowers typically use second mortgages to pay off credit card debts, high interest loans or private loans. A second mortgage can assist with debt consolidation by combining all high interest debts into one low monthly payment. A second mortgage differs from a home equity line of credit. When you obtain a second mortgage, you receive all of the funds in a lump sum. Your monthly payments remain the same throughout the length of the loan. With a home equity line of credit, you borrow the money as you need it, up to a set limit. Your monthly payments fluctuate because the interest rate is adjusted monthly and the amount you owe varies. Your mortgage professional can help you determine the type of loan that is best for your situation. |
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