Home equity loan or second mortgage. If you're in debt and you're looking for relief you may end up looking at your home for help. Borrowing against your home can be a helpful way to get out of a bad debt situation or to get money to pay for an unexpected expense.

What Is a Home Equity Loan or Second Mortgage?

Home equity loan: Many people confuse and mistake these two concepts for one another. A traditional second mortgage can pay out a large amount of money and the borrower is expected to pay this money back on a regular schedule.

Second mortgages: Are usually, 15 to 30-year loans with a fixed interest rate. With these loans you receive a fixed amount and you will pay it back over time. A home-equity loan is not a second mortgage. The amount you can borrow is usually, a much smaller amount over a much shorter payment period of usually 2 to 4 years. The whole process is much faster often completed within the same day as there are no legal transactions necessary. The amount of loan is based on the value of your home anywhere from 50% - 80% depending on the lender. There will be a fixed interest rate over a fixed period of time. But some lenders allow open loans, which can be paid back earlier than later.

How Do Home Equity Loans interest Rates Work

Basically, home equity loans our secondary loans made to the principal mortgage. The principal mortgage is that’s called the primary position on a piece of real estate. That's when you first bought your home you took out a mortgage to buy the house. You put a down payment under the guidelines of the bank. Over time you start to pay your mortgage down. And then you see that your house is growing in value normally over time as well. Then you'll see that the equity position that you do have in your house is quite substantial. What you're able to do is take out a secondary line of financing from your same bank or a different bank. That a particular mortgage uses a secondary position and therefore, has a higher interest rate normally, than the primary mortgage. This is how home equity loan and home equity line of credit interest work.

Home Equity Loan Low-Interest Rate 

Who has the cheapest rates on home equity loan? They're called helax for short. It's good for a consumer to look at the following website, bankrate.com to find out at any given time in the marketplace, who has the lowest interest rates on home equity loans. It's important in a marketplace to follow economic trends when the government lowers interest rates and benchmark interest rates mortgage companies. Usually, following lockstep, it depends on what type of a mortgage you want to have but it's important to call brokers in your local market place to get quotes that are one way. But bankrate.com is, of course, an excellent way as well, for you to look at this type of shopping for who has the lowest rates in home equity loans.