HELOCs and 2nd Mortgages Loans
Access your equity without giving up the rate on your first mortgage.
If you have a low fixed rate on your first mortgage, refinancing to pull cash out can be an expensive way to access equity. A HELOC or a closed end second mortgage leaves that first loan alone and adds a separate lien for only the amount you need.
A HELOC works like a credit line you can draw from and repay repeatedly during the draw period. A closed end second gives you the full amount at closing with a fixed rate and a fixed payment.
HELOC versus fixed second
Choose a HELOC when the amount and timing are uncertain, such as a phased remodel. Choose a fixed second when you know the exact amount and want a predictable payment, such as a debt payoff.
- HELOC: draw as needed, pay interest only on the balance drawn
- Fixed second: full amount at closing, fixed payment
- Both leave your first mortgage untouched
How much equity you can use
Most programs allow a combined loan to value up to a set ceiling. We take your home value, subtract your existing first mortgage balance, and the remainder within that ceiling is what is available.
Costs to plan for
Second lien closings are usually lighter than a first mortgage. Expect a valuation, title work, and modest lender fees, with some programs offering reduced or waived costs.
Documents to gather
Documentation is typically streamlined compared with a full first mortgage.
- Recent pay stubs or income documentation
- Current mortgage statement
- Homeowners insurance declarations page
- Photo ID for each borrower
Advantages
- Keeps your low rate first mortgage in place
- Borrow only what you need
- Faster and cheaper to close than a full refinance
- Interest may be deductible in some cases, check with your tax advisor
Things to consider
- HELOC rates can move with the index
- Adds a second monthly obligation
- Your home secures the debt
- Draw periods eventually convert to repayment
Common questions
Will this change my first mortgage?
No. Your existing loan, rate, and term stay exactly as they are.
How fast can a second close?
Many second lien and HELOC programs close in a few weeks, faster than a typical first mortgage refinance.
Can I pay it off early?
Yes. Check the program for any early closure fee within the first few years.
Program disclaimers
- * Higher interest rates apply
- ** For a 30-year, fixed-rate loan
- Program details are informational only and are not an offer for extension of credit or a commitment to lend. Terms are subject to change without notice.
Ready to explore HELOCs and 2nd Mortgages financing?
Start a conversation with a licensed loan officer, or begin your application whenever you're ready.