A second mortgage can be referred to as a home equity loan. It is basically a second mortage to your primary, or first, mortgage. It is not to be confused with refinancing. It is another loan and will mean a second payment.
There are two basic types of home equity loans: straight installment home equity loans (HELs) and home equity lines of credit (HELOCs). Home equity loans are second mortgages that use the equity in your home as collateral to secure the loan. There are different rules for securing each of these types of loans but the home equity loans interest rates are going to be comparable.
Most home equity loans offer fixed rates loans and the typical payback period is 15 years, although is can be as short as 3 years and as long as 30 years. In general, home equity loans interest rates are going to be lower than credit card rates but higher than current primary mortgage rates. The current national average mortgage rate for a 30 year fixed rate mortage is 5.17%. The current national average for a 12 year home equity loan is 8.61%.
Another factor in determining the rate of a home equity loan is the lenth of time of the loan. The current national average of 5 year home equity loan is 8.11% compared with a 10 year home equity loan that is slightly higher at 8.37%.
If you are interested in finding out the current home equity loans interest rates for your area, you can go to either bankingmyway.com or bankrate.com. Both sites will give you the national averages and specific interest rates for banks and lenders in your area. You can compare these rates to find the right fit for your needs.
It is always smart to shop around for the best rate before you secure a new home equity loan.