Steven Birdsong serves as a loan officer at West Coast Mortgage in Sacramento, California, where he works diligently to secure financing for clients. Over the course of a career that spans nearly 20 years, Steven Birdsong has arranged both first and second mortgages.
A second mortgage, also known as a home equity line of credit or home equity loan, allows a homeowner to borrow against the value that he or she has built in a property. You build equity as you pay down the balance of your mortgage, creating value that you own apart from any obligation to the bank.
You can borrow against that equity in a number of ways. The most common form involves the receipt of a lump sum, which you repay with fixed monthly payments that include interest as well as a portion of the loan balance (the principal).
A home equity line of credit, or HELOC, provides you with a set amount that you can borrow from as you need it. Your lender approves you for a maximum limit and you can continue to receive money up to that limit as long as you keep making payments according to the terms of the loan. Repayment on a HELOC also includes interest paid, and rates on these loans tend to be variable.
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