Closed End Second Mortgage Loans
Another type of second or junior mortgage is a closed-end loan. This traditional second mortgage loan provides you with a fixed amount of money repayable over a fixed period. This type of loan advances all funds at the time the loan is closed with no further advances. The loan can be interest following or precomputed. It is always preferable to have an interest following loan if you plan to pay the loan off before maturity.
You might consider a traditional second mortgage loan instead of a home equity line; if, for example, you need a set amount for a specific purpose, such as an addition to your home.
In deciding which type of loan best suits your needs, consider the costs under the two alternatives.
