Which is best: a home equity line of credit, or a regular second mortgage?

They are different. What suits your needs best will depend on your particular situation. With a second mortgage, you borrow (in full) a fixed amount of money that is to be paid back over a fixed period of time, or is due in full – called a balloon payment – at a given time. A home equity line of credit is somewhat like a second mortgage, but is more flexible. It is a line of credit that can be borrowed incrementally by writing a check or using a credit card associated with the loan. In this way, you can use as much or as little of the total amount available, as your needs dictate. This type of loan typically has a variable rate, whereas a second mortgage is more likely to be a fixed rate.

Another significant difference between the two types of loans is in how the APR is calculated, so it may be a little harder to compare “apples to apples” when comparing the two. With a second mortgage, the disclosed APR takes into account the interest rate plus points, finance charges and other fees. But with a home equity line of credit, the APR is based just on the periodic interest rate.