Question:

How to compare HELOC vs HELOAN vs second mortgages?

Answer:

HELOC vs HELOAN is simply an open-end HELOAN vs closed-end HELOAN, to put it shortly. HELOC stands for home equity line of credit while HELOAN stands for home equity loan. HELOCs are the open-end version of HELOANs.

As for second mortgages, one can say that they are a type of home equity loan and vice versa. A HELOAN is often referred to as a second mortgage.

A HELOC rate will adjust often, and may reach the usual cap of 18% if the prime is rising. When the prime is high, HELOCs make less sense to take and sometimes people choose to switch to a fixed-rate HELOAN.

HELOCs and HELOANs are usually thought as second mortgages, but if they are used to refinance a first mortgage, they become first mortgage loans, rather than seconds.

Also, even though HELOANs and HELOCs are used to signify home equity loans with fixed and adjustable rates, respectively, some lenders will use them interchangeably and treat them both as adjustable rate.

Mortgage rates hit their lowest since 1955. Ask the home loan experts we recommend Quicken Loans how to take advantage of them.
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