It can be frustrating to plan home renovations or your child’s education only to realize that you don’t have the necessary funds. When it comes to finances, many people and families turn to loans, but don’t know all the options available to them. Depending on your situation, certain financial products will provide you with benefits, such as access to a larger amount of funds or a lower interest rate and monthly payment.
Our trusted advisors provide clarity, explaining the differences between a second mortgage loan and a HELOC. Once you’ve read this blog post, you’ll know when to come to us for a second mortgage loan.
What Is a Second Mortgage Loan?
Homeowners pay a mortgage on their house. With each payment, the equity increases in the home.
A second mortgage loan allows homeowners to take advantage of their home’s equity and use it to achieve their goals. At Tribecca Finance you can access a larger amount of equity and borrow up to 85% of your home’s market value less the outstanding balance of your mortgage. By doing so, you’ll get a lump sum for the desired amount, and payments can be made in one of two ways:
- Amortized principal and interest payments
- Interest-only payments
There are various ways of designing a second mortgage loan payment plan, and the advisors at Tribecca Finance have years of experience in the field. They will custom-design a plan for you after having a discussion about your goals. Need to start your monthly payments up to 12 months after getting the loan? No problem! It’s your choice. We want to make sure you’re comfortable with your plan.
The advisors at Tribecca Finance can also design a customized term providing flexibility, such as a term to match the maturity date of your first mortgage or an open loan with no penalty. An open term is great if you require the funds for a shorter period of time.
If you require funds quickly, a second mortgage loan is an excellent option. Tribecca Finance provides same-day approvals and you will receive your funds within days.
What Is a HELOC?
HELOC stands for “home equity line of credit.”
A stand alone HELOC is secured on a property, the same way a second mortgage loan is. Much like a credit card, homeowners with a HELOC can use the funds from the equity of their homes and make as many purchases as they need within a designated limit. The limit, which is based on the existing equity in your home, dictates how much you need to pay back each month. With a HELOC, you need to pay only the interest on the outstanding balance.
Since it’s considered revolving credit, you don’t need to apply for another HELOC or loan if you need to borrow more money, later on, assuming you are not at your limit. With a HELOC, you can borrow, pay back the entire sum, and then take more money out for another purchase.
When a HELOC is a stand-alone product, homeowners can borrow up to 65% of their home’s market value less the outstanding balance of your mortgage.
HELOCs provide flexibility and are beneficial if you are able to obtain the funds you require or do not need the funds immediately and require them at a later date.
Common Benefits of a Second Mortgage Loan and HELOC
There are several benefits with both products. You can use the funds for a wide range of expenses and big ticket items.
If you have credit card debts or other loans, you can pay them off and save thousands of dollars in interest each year and lower your monthly payment by more than half.
If you are looking to renovate your home, you can get funds and set a monthly payment plan within your budget to accomplish this goal. Some homeowners finish their basement to add additional rental income. If you are looking to renovate your home prior to selling, it’s wise to consult a real estate professional to determine what improvements will add value.
Many of our customers are self-employed. At Tribecca Finance, we have provided funds to many business owners to invest in their business. Whether it be to purchase equipment, inventory, pay off debt or grow your business, we can assist.
There are many more benefits to a second mortgage loan or HELOC. Depending on how much equity you want to access as well as your personal situation, we can help you figure out the best plan for you. Approval guidelines for second mortgage loans are more flexible than HELOCs and at Tribecca Finance you are able to access up to 85% of the equity in your home. Having access to funds opens doors for many people that aren’t aware of the options available to them.