When considering the facts within this article, it may be quite surprising to find some of the issues you thought were settled are actually still being openly discussed as to which type of loans are best.

A second mortgage is a mortgage whose terms are subordinate to the first mortgage. Loans with a second mortgage are usually done when the homeowner needs money in order to pay for an existing loan.

What Type Of Loan Is Best - A Second Mortgage, Home Equity Loan Or Refinance?

This is a question every homebuyer is faced with when shopping for mortgages. Take this scenario: A homeowner is facing a credit card debt of $50,000. Should he take a $190,000 second mortgage to refinance an existing mortgage with a balance of $140,000? Or should he borrow the money from a $50,000 home equity loan?

In most cases, borrowers who took a mortgage when rates were lower will find a second mortgage better than a home equity loan. But to be certain, some factors need to be considered.

You need to compare the interest rate and points of the first mortgage with that of a second mortgage. Second, find out if there are any PMIs (Private Mortgage Insurance) involved with the second mortgage. Find out what loan term is most favorable for you on your second mortgage. Your income tax bracket and amount of cash you need from your second mortgage are also necessary factors.

Consider the case above. If the first mortgage at $14,000 was acquired two years ago, the interest rate would be 7 percent for 30 years without PMI. Let