What is the difference between a second mortgage and a home equity loan?

There is no difference between a home equity loan and a second mortgage when the homeowner receives a lump sum of money at once with a fixed or variable interest rate, explains SFGate. A home equity loan differs from a home equity line of credit, or HELOC, which provides the homeowner with a line of credit using the home as collateral, according to The Mortgage Professor. A home equity line of credit always comes with an adjustable interest rate.

A home equity line of credit provides the homeowner with the same amount of money as a home equity loan, but the borrower with a home equity line of credit can withdraw any amount of money he wants at any time, notes The Mortgage Professor. Therefore, a HELOC acts more as a credit card than a loan. Even though many consider a home equity line of credit as synonymous with a second mortgage, sometimes it is technically a first mortgage. For example, if the homeowner completely owns his home without any existing liens on it, and takes out a HELOC, this is a first mortgage.

Many homeowners use a home equity line of credit to pay for expenses stretched out over a long period of time, such as multiple home improvements completed at different times or to pay for college tuition, explains The Mortgage Professor.