What is a Line of Credit

What is a Line of Credit

What is a Line of Credit

With a secured line of credit you will be paying in the range of prime plus one percent to prime plus four percent.The reason this rate is higher is because a line of credit is treated as a second mortgage. A second mortgage is called this because in the event you default on your mortgage and it goes into foreclosure the holder of the first mortgage has the right to sell the property and apply the proceeds to satisfy the amount outstanding. If there is nothing left over then the line of credit or the second mortgage would be at a loss, that is why the interest rate being charged is higher.

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