What are the key considerations when deciding whether to get a second mortgage, a 401k loan, or a home equity line of credit (HELOC)?
Second mortgages, 401k loans, and HELOCs can all be attractive options for borrowers looking to access the equity in their home. However, there are some key considerations to keep in mind when deciding which option is right for you.
A second mortgage is a loan that is secured by the equity in your home. This means that if you default on the loan, your lender could foreclose on your home. Because of this, second mortgages typically have higher interest rates than other types of loans.
A 401k loan is a loan that is taken out against your 401k account. This type of loan is typically only available to borrowers who are current employees of the company that sponsors their 401k plan. 401k loans typically have lower interest rates than other types of loans, but they also come with the risk of losing your retirement savings if you are unable to repay the loan.
A home equity line of credit is a line of credit that is secured by the equity in your home. This type of loan typically has a lower interest rate than unsecured lines of credit, but it also comes with the risk of losing your home if you are unable to repay the loan.