Manifesting Cash with a Second Mortgage

While a second mortgage doesn't yield a lump sum of cash like a winning lottery ticket, it can provide you with a reliable chunk of change that can be used for a variety of purposes. A second mortgage can free up funds for home improvements, vacations, and funding college educations. And it comes with two different loan options-the home equity line of credit (HELOC) or the fixed-rate home equity loan.

Flexible options: HELOCs

The HELOC is a line of credit secured by the equity in your home. Like your credit card, it doesn't accrue interest charges until you use it. You're free to tap as much or as little of the loan as you'd like, a flexibility that distinguishes it from the home equity loan.

However, while the flexibility is great, a HELOC can have its disadvantages when it comes to the interest rate. Since the rate isn't fixed, it can fluctuate based on the changing interest rate marketplace. In other words, your rate is likely to rise significantly if interest rates take an upward turn.

Locked for the long haul: home equity loans

In contrast, the home equity loan offers a fixed-rate for an established term. You won't have to worry about rising interest rates putting a dent in your cash flow, as you'll have a set payment throughout the life of the loan. The disadvantage is that your loan amount is also fixed. If you want to draw out extra cash, you'll need to get a whole new loan.

If it makes you happy, go ahead and keep dreaming about winning the lottery. But while you're waiting for your magical number to be called, consider a surefire source of cash: the second mortgage. You'll find that it may be the ticket for accessing at least part of the money of your dreams.