How Does a Second Mortgage Work on a Santa Cruz Condo?

Posted by Lauren Spencer on Monday, September 20th, 2010 at 11:01pm.

You may not know it, but you can take out a second mortgage on your Santa Cruz condo, if you have equity in the property.  A lender may offer you a home equity loan (HEL) or a home equity line of credit (HELOC).  Which one is right for you?  Here are a couple of tips to help you decide:

• A home equity loan is commonly referred to as a second mortgage.  Expect the process to be similar to getting your primary mortgage.  Your home will have to be inspected, and you’ll need to arrange for another appraisal.  Home equity loans frequently have a higher interest rate than primary mortgages because the lender is at a greater risk of you defaulting on the loan.

• The HEL can be a fixed-rate mortgage, which means that your interest rate and payments are fixed for the duration of the loan.  This makes it easier to plan for the payments, so you’ll be able to borrow responsibly and not get in over your head.

• A home equity line of credit is more like a credit card secured by your Santa Cruz condo.  It allows you to withdraw money, up to a set limit, whenever you need it. There is generally a minimum payment due each month.  Unlike a loan, you'll increase your available credit each time you make a payment.

• A line of credit usually has a variable interest rate, like a credit card.  It may have a low introductory interest rate for a short time, and then increase for the rest of the loan term.  You can access the funds with a bankcard or checks drawn off the HELOC.

If you are borrowing for a single project like remodeling the kitchen of your Santa Cruz condo, you might think about a home equity loan.  However, if you’re looking to finance a re-occurring expense like college tuition, an open line of credit might work best for you. 

Have questions about mortgages or real estate?  I’m happy to help.  Call me today at 831.662.6522 or email me at or visit my website at


Home equity loan


Home equity line of credit

About Lauren Spencer

Award-Winning Santa Cruz REALTOR®

Lauren Spencer is your local real estate expert, specializing in Santa Cruz real estate and surrounding communities—this is where she lives, works, and plays too. Let her know your questions about the community and county and she'll be happy to fill you in on all you want to know! Lauren Spencer has consistently been voted best local REALTOR in Santa Cruz and is always happy to offer her advice and expertise. Call her at: 800.226.4717.

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