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Understanding Second Mortgages: HELOCs and Home Equity Loans

Carrollton Mortgage – Helping You Unlock the Power of Your Home

At Carrollton Mortgage, we believe your home should work for you—not the other way around.

You’ve probably heard about home equity loans and HELOCs, but which one is right for you?

We’re here to guide you every step of the way.

What Is a Second Mortgage?

A second mortgage is a loan secured by your home—in addition to your first mortgage. It lets you borrow against the equity you’ve built, typically up to 90% of your home’s appraised value (minus what you still owe on your primary mortgage).

Second mortgages usually offer lower interest rates than credit cards or unsecured loans, but they also come with risk—missed payments can lead to foreclosure.

There are two main types of second mortgages:

Home Equity Loans
Home Equity Lines of Credit (HELOCs)

Let’s break them down.

🏠 Home Equity Loan

A home equity loan gives you a one-time lump sum, repaid over a fixed term (usually 5 to 30 years) with consistent monthly payments.

Key Benefits:

Fixed Interest Rate – Payments stay the same from start to finish
Lump-Sum Funding – Ideal for one-time costs like remodeling, debt payoff, or medical bills
Predictable Repayment – Easier to plan and budget

🔁 Home Equity Line of Credit (HELOC)

A HELOC is a revolving line of credit. You draw funds as needed during a draw period (typically 5–10 years), then repay what you’ve borrowed during the repayment period.

Key Benefits:

Variable Interest Rate – Rates may change over time
Flexible Access to Funds – Borrow only what you need, when you need it
Interest-Only Payments – Many HELOCs allow interest-only payments during the draw period