There are two types of Fresno home equity debt: home equity loans and home equity lines of credit. Both are sometimes referred to as second mortgages, because they are secured by your property, just like the original, or primary, mortgage.

You have probably heard the term "home equity line of credit" in the past, but did you know what it really meant?

A Fresno home equity line of credit allows you to borrow money while using your home and property as collateral.

A home equity line of credit (HELOC) is a second mortgage on the equity already in the home. They work like credit cards, but often have lower interest rates. You borrow against the money you have invested in your home, usually to consolidate other high-interest loans. HELOCs can be fixed-rate or adjustable rate loans.

Your payment plan has two parts:

Draw period: For the first term, you can borrow as much of your home’s equity as you want. You only pay interest during this period.

Amortization: You have to start paying principal and interest on your debt. 

Advantages of a HELOC:

This is a smart choice if you can get a low interest rate. This lets you pay off high-interest debt (like credit cards) or pay for emergencies.

If you have a strong credit score, you can get very low fixed rates.

The interest you pay on a HELOC may be tax-deductible.

Disadvantages of a HELOC:

Borrowing against your house can backfire. The biggest risk is that you could lose your home if you aren’t able to pay back the loan.

Be careful about paying off your debts. It’s not worth risking all the equity you’ve built up, if you can’t pay off your HELOC in the end and just wind up deeper in debt. 

Fresno home equity lines of credit usually are repaid in a shorter period than first mortgages. Most commonly, mortgages are set up to be repaid over 30 years. Home equity lines of credit often have a repayment period of 15 years, although it might be as short as five and as long as 30 years.