Cash from equity without giving up a good first mortgage: second lien or cash-out refinance
Route 2: a home equity loan
The short version
A home equity loan is a second mortgage paid out as a lump sum, usually at a fixed rate and payment. It suits a one-time expense when you want to leave your first mortgage alone. Its rate is often higher than a first-mortgage rate, so it works best when the amount is modest compared with your first lien.
Last reviewed against the primary sources listed below.
Compared with a HELOC
| Home equity loan | HELOC | |
|---|---|---|
| Payout | Lump sum | Draw as needed |
| Rate | Usually fixed | Usually variable |
| Payment | Level | Changes |
Lien questions
Is a home equity loan the same as a second mortgage?
Yes. It is a second lien behind your first mortgage.