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At some point in life-maybe your oldest is off for college or you're finally ready to put on that home addition-you may want to tap into the equity of your home. You have several options here, and two that are commonly confused are the home equity line of credit, and the second mortgage. Below, Michael Litzner, Broker of Century 21 American Homes gives us a breakdown of the difference. "A second mortgage is any loan that involves a second lien on the property," says Litzner. "You receive a lump sum at the beginning of the loan, and every month you pay down the principal and the interest." The second mortgage can be fixed or variable, and the available amount is often based on the difference between your home's current value and the outstanding principal balance on your first mortgage. "As second mortgages are subordinate to first mortgages--meaning your first mortgage gets paid off first should the loan default-they are riskier for lenders an...
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