Lately, consumers have been hearing a lot about “home equity line of credit” second mortgage loans. This type of second mortgage, also know as a HELOC loan, is gaining in popularity with home owners who need cash.

There are a few differences between a HELOC second mortgage loan and a traditional one. A traditional second mortgage loan offers a lump sum that is usually paid in full upon closing. In contrast, a HELOC second mortgage loan is set up somewhat differently in terms of payment and cash available structures.

Your loan officer will outline for you how a home equity line of credit works. When you are approved for such a loan, you are authorized by the lending institution to borrow up to a certain pre-set amount. How much this amount is depends on factors such as how much equity you have in your home and how much cash you think you may need.

Rather than getting the full value of the loan immediately, you can treat the line of credit somewhat like a checking account, accessing the money you need when you need it. There will likely be conditions attached to the loan, such as a minimum amount you must withdraw. There may also be a limit to the time period during which you may make withdrawals. Discuss these conditions carefully with your loan officer before signing any papers.

A HELOC second mortgage loan may be the answer for you if you have upcoming expenses the total amount of which are difficult to anticipate – such as medical bills or home renovations. However, keep in mind that you will be paying back, with interest, any funds that you withdraw from a HELOC, and like any mortgage, it is secured by your home.