Also, I think the guy above is right. It doesn't have to be a "second" mortgage. I think the holder of the 1st mortgage can actually just loan you more money and increase the size of their security interest accordingly. If it's anything like secured transactions in personal property, they can do this without losing their priority.

(http://www.autoadmit.com/thread.php?thread_id=3393760&forum_id=2#31691806)

(http://www.autoadmit.com/thread.php?thread_id=3393760&forum_id=2#31692044)

"What are the differences between a second mortgage and a home equity loan?"

The terminology is confusing. A second mortgage is any loan that involves a second lien on the property. Some second mortgages are for a fixed dollar amount paid out at one time, in the same way as a first mortgage. As with firsts, such seconds may be fixed-rate or adjustable-rate.

The seeds of confusion were sown in the 1980s when second mortgages appeared that were structured as a line of credit rather than for a fixed dollar amount. Borrowers could draw up to some amount, when and as they pleased. These loans were called "home equity loans" or "home equity lines of credit", with the latter shortened to HELOC. They are always adjustable rate.

I now avoid the term "home equity loan" and use "HELOC" to refer to any mortgage loan structured as a line of credit. While most of these loans are second mortgages, some are first mortgages. If you own your house free and clear and you want a line of credit secured by a mortgage, that loan is a HELOC, even though it is a first mortgage. Similarly, if you use a HELOC to refinance your first mortgage, the HELOC becomes a first mortgage.

I avoid "home equity loan" because the term is now used to mean many different things. Some people in the marketplace use it as a synonym for second mortgage, while others use it as a synonym for HELOC. Regulators usually define it as a mortgage on a home that is used for some purpose other than to purchase the home. And the National Home Equity Mortgage Association defines it as a mortgage to a subprime borrower!

In terms of usage, a HELOC is most convenient when your cash needs are stretched out over time. A common example is a series of home improvements, one followed by another. College tuition payments is another.

Fixed-dollar seconds are best when you need all the money at one time. Many home purchasers take out such seconds to avoid mortgage insurance on the first mortgage.

When taking a fixed-dollar second, borrowers can select between fixed and adjustable rates, as they prefer. When taking a HELOC, they take an adjustable because all HELOCs are adjustable. However, some can be converted into a fixed-dollar second at the market rate prevailing on the second at the time. 

(http://www.autoadmit.com/thread.php?thread_id=3393760&forum_id=2#31691926)

you: not

(http://www.autoadmit.com/thread.php?thread_id=3393760&forum_id=2#31691912)

House appreciates to $2M. Now loan ($800,000) to value ($2,000,000) is 40%. The bank was fine with 80%, so you can borrow another $800,000 no problemo. (If you did, your LTV would rise back to 80%, the highest level most banks like to have absent rare circumstances.)

Interest paid on this loan is deductible up to $1 million if you are using it to purchase or improve a home or $100,000 if you are doing anything else with it.

(http://www.autoadmit.com/thread.php?thread_id=3393760&forum_id=2#31691816)

(FYI, a home equity line of credit is what most people have these days; it differs from a loan in that it is a revolving facility and you pay interest only on what you actually borrow, though you may pay fees to set up the facility and annually. A loan is for a fixed amount so you end up paying fees/interest on the whole amount, you borrow, regardless of whether you actually needed it or not.)

(http://www.autoadmit.com/thread.php?thread_id=3393760&forum_id=2#31691871)

as i've said throughout, interest on the HELOC is deductible. if you are a biglaw wage slave, that helps come tax time.

HELOC won't fuck up your credit score.

(http://www.autoadmit.com/thread.php?thread_id=3393760&forum_id=2#31691956)

and you have a house anyway, you shouldnt need 810+ credit for anything

but i guess on the multiple year thing

(http://www.autoadmit.com/thread.php?thread_id=3393760&forum_id=2#31692026)

use it if the interest rate is lower than what you would otherwise get

for example, it may make sense to borrow it to pay off 8% student loans if you are borrowing at 4%, or to build shit, or whatever

just be aware that you are increasing the loan on your house (by reducing the equity you've already bought in)

(http://www.autoadmit.com/thread.php?thread_id=3393760&forum_id=2#31691891)

It was like equity was just oil bubbling under your house that you could come have mined.

(http://www.autoadmit.com/thread.php?thread_id=3393760&forum_id=2#31691896)

You paid down 400K and you have mortgage outstanding of 600K so you own 40% of the house and bank owns 60%

Your share is your equity, the 400k or 40% of the house.

You develop drug and womanizing habit and need 100K asap so you go to bank and they give you another 100K for 10% of the house (this is called taking out 100k of equity). Now you own 300K or 30% of the house, original mortgage is still for 600K or 60% of the house, home equity loan is for 100k or 10% of the house. Bank owns 700K or 70% of your house now (could be two diff banks ofs).

(http://www.autoadmit.com/thread.php?thread_id=3393760&forum_id=2#31691925)

Interest payments are deductible for both.

(http://www.autoadmit.com/thread.php?thread_id=3393760&forum_id=2#31692012)

401(K) means u pay income tax upon withdrawal during retirement.

401(K) roth means you pay income tax when you earned it.

(http://www.autoadmit.com/thread.php?thread_id=3393760&forum_id=2#31692098)

I think tax deductibility of HELOC and Prop 13 are big reasons why Cali real estate is fucked. People can just borrow and borrow and improve their shit houses and never should sell.

(http://www.autoadmit.com/thread.php?thread_id=3393760&forum_id=2#31692003)

(http://www.autoadmit.com/thread.php?thread_id=3393760&forum_id=2#31691987)

(http://www.autoadmit.com/thread.php?thread_id=3393760&forum_id=2#31692064)