ABA Family Legal Guide

Home Ownership

The Financial Side of Home Ownership

Refinancing and Home Loans

What's the difference between a home equity loan and a second mortgage?

They are similar in that the interest on both is tax deductible (up to $1 million of loans secured by the same property), and the home serves as collateral for both types of loans. They differ because a second mortgage usually consists of a fixed sum for a fixed period of time, while a home equity loan usually works as a line of credit on which you may draw over time. Typically, a home equity loan carries an adjustable interest rate, while a second mortgage carries a fixed rate, although this is not always the case in today's market.