ABA Family Legal Guide

Home Ownership

The Financial Side of Home Ownership

Refinancing and Home Loans

Which is better, a home equity loan or a second mortgage?

If you need a lump sum of cash, you are probably better off with a second mortgage because you will get a better interest rate on the loan. If you need money over a longer period of time, such as to pay college tuition or to pay for renovations planned over the next few years, it may be better to obtain a home equity loan. That way, you won't be paying interest on the money until you actually withdraw it as you need it. You can refinance at the end.