Anytime you take out a second loan, your home is used for collateral to provide security to the lender. Second mortgage equity loans are intended to provide lump sums of money to the homebuyer, which he repays on a set contract. The money can then be utilized for most any purpose; however, it is recommended to pay off debts, rather than spend at leisure.
The loans can be utilized to pay off tuition, which is a great idea, since the loans for college tuition can lead to hassles. Otherwise, if you take out a second mortgage equity loan, you may want to repair your home and improve the home for increased equity.
Loans are options for everyone, but if you have credit issues, then the second mortgage equity loan might be in your best interest. Home equity loans are intended to offer higher rates, since it is a second loan; however, the rates are factored by the secured interest rates on credit cards and other loans. In other words, you are getting a loan to payoff the higher interest rates on credit cards, car loans, or other secured loans and paying new interest on the current loan. If you are pending debts, a second loan could prove worthy.
Some lenders will offer great repayment rates on a secondary loan. For example, one writer pointed out that if you took out a loan in the amount of $10,000 in credit card debt at 15%, then a secondary loan repayment would equal $278. The writer continues by showing an illustration that if the buyer takes out a secondary loan with a 15% on a home equity loan over a fifteen-year term then the repayments would be around $140. Thus, you can see second mortgage equity could be worthwhile.
Go on now to the next step of your home equity loan guide which focuses on Securing an Equity Lender Loan.