When searching for a second mortgage, you’ll essentially have two product types to choose from: fixed rate, fixed term loans or Home Equity Lines of Credit (HELOCs). Fixed rate mortgages are usually between five and twenty years, and your monthly payment will never change. HELOCs are adjustable rate loans with rates pegged to the prime rate. These move at the same time and amount as any changes the Federal Reserve makes to overnight Federal Funds Rates. Let’s dive deeper into each option…
Fixed rate, fixed term loans are pretty straight forward. You can compare rates and costs to know which option is best. In many cases, second mortgage lenders will pay your closing costs as long as you don’t pay the loan off within three years. Typically, the shorter the loan term (say ten years instead of twenty), the lower the interest rate. However, the shorter the term, the higher the payment. It is important not to choose a payment that is too high for your budget just because you are intrigued by the lower interest rate.
HELOC’s come in many different forms. Be sure to take all the differences into account before choosing your HELOC lender. Mechanically, all are very similar to a credit card and have these features:
To help consumers compare options between different HELOC lenders, Apex Home Loans has prepared a questionnaire to help you determine which option is best: Download Questionnaire.
If you would like to review your completed questionnaire with an experienced and friendly loan officer from Apex Home Loans, please, contact us.
Topics: Maryland Second Mortgage