If you need money, are a homeowner and have equity built up in your home, then you have several options available to you. The most obvious is taking out a second home loan using the equity as collateral. Although popular, a second mortgage is often not the best choice. It is a home equity line of credit that offers the most benefits to the borrower. The following are four of these advantages.

You don't have to make the payment

Well, this is not exactly true, but you can pay only the interest owed for the month if you choose. This can come in handy in a month where you have an unexpected expense. If you have a second mortgage, you must make the full payment like you would with any mortgage.

You can pay down the balance and still have credit available

With a traditional loan of any type, once the loan is paid off, the loan is finished. If you want more money, you have to take out another loan. Although there is a fixed period of time in which a line of credit is available, as long as the time period has not expired, you will have money available up to the limit of your line of credit. If you pay down the entire amount of money you have borrowed, you can borrow more in the future.

If you don't use the line of credit, there are no monthly payments

Once you have established a line of credit, you may decide that you don't need the money right away. In this case, you will have no monthly payments. If you were to borrow this money as a traditional equity loan, you are faced with monthly payments along with interest each month, regardless of whether you have used any of the loan money.

There are convenient ways to access your credit

Depending upon the lender, you can use your line of credit in various ways. A single account can be used with a debit card, allowing you to make several small purchases instead of one large purchase that is common with a second mortgage.

If you need a large amount of money for a specific reason, a second mortgage might be the way to go, but as you can see from the advantages listed above, it is a home equity line of credit that is the option offering the most benefits to a homeowner. Always consider taking out a line of credit before taking out a second mortgage on your home. For more information, on home loans, talk to a professional like MCS Bank.