Home Equity/Line of Credit loans are secondary liens against a property. These are commonly referred to as “second mortgages.”
Closed End Home Equity loan is a fixed rate, fixed term loan
- the principal and interest payments do not change.
Open Ended Home Equity loan is a line of credit where any amount of cash, up to the established amount of the loan can be withdrawn as needed.
- often used as a way to pay for tuition or on-going home improvement project.
- interest rate adjusts based on the prime index rate as published in financial newspapers and websites.
- monthly interest payments made on amount borrowed.