xmailr's Blog: Home Equity Loans

Should you access a home equity mortgage or a home equity line of credit, known as a home equity line?  Wikipedia says that both home equity lines of credit and home equity loans are usually referred to as second mortgages, because they are secured against the value of the property, just like a traditional mortgage. The plebeian vernacular is hardly a definition as to features of a loan document.

The really significant difference is the disposition of payments as they apply to the principal balance.  A closed end loan (home equity mortgage) can record payments against the loan balance only one time a month by law, whilst an open end loan (home equity home equity line of credit) can account for payments any day and immediately alter the balance to which…