Home equity line of credit · Keep your first mortgage
Borrow against your equity, and keep the mortgage you have.
A HELOC is a line of credit against your home’s equity. Draw what you need, when you need it, and pay interest only on what you use, while your first mortgage stays exactly as it is.
What to know.
The essentials, in plain English.
- Keep the mortgage you have
- Your first mortgage keeps its rate and its terms. The line sits alongside it.
- Pay interest only on what you draw
- Unlike a cash-out refinance, you borrow only what you need, when you need it, and pay interest only on that.
- Made for projects in stages
- A good fit for renovations that happen over time, or expenses that come in more than one bill.
- Terms explained before you sign
- Your loan officer walks you through the draw period, the repayment period, how the rate can change and any fees, before you sign.
What happens after you press the button.
- Your loan officer reaches out
- Charles reads what you send personally and gets in touch to talk it through.
- What you’ll talk about
- Your project or goal, roughly what your home is worth and what you owe on it.
- What to have handy
- Your latest mortgage statement, and a rough idea of the amount you’d like to have available.
Who it fits
Homeowners with equity who want flexible access to it.
- Owners who want to keep the rate on their first mortgage
- Owners planning renovations in stages
- Owners who want a safety net for large expenses
- Owners paying tuition over several years
What you’ll need
Your loan officer confirms the list for your line.
- Your latest mortgage statement
- Recent pay stubs, W-2s and tax returns
- Your homeowners insurance details
- A photo ID
HELOC or Cash-out refinance?
| HELOC | Cash-out refinance | |
|---|---|---|
| Your first mortgage | Stays as it is, rate and all | Replaced by one new, larger loan |
| How you get the money | As you need it, up to your limit | All at once, at closing |
| Rate | Usually adjustable, on what you draw | Fixed or adjustable, on the whole loan |
| Often fits when | You want to keep your current mortgage | A new rate on the whole loan works in your favor |
Common questions
How much can I borrow with a HELOC?
It depends on your home’s value, what you owe and your finances. Lenders limit your mortgage and your line together to a share of your home’s value.
Do I pay anything if I do not use it?
Interest is charged only on what you draw. Some lines have annual or other fees, which your disclosures show.
What are the draw period and the repayment period?
During the draw period you can borrow from your line, and payments may cover interest only. During the repayment period you can no longer draw, and you repay what you owe. Your agreement sets how long each lasts.
Can my HELOC rate change?
Most HELOC rates are variable and move with an index, within limits set in your agreement. Some lenders let you lock part of your balance at a fixed rate.
HELOC or cash-out refinance?
A HELOC keeps your first mortgage and adds a line of credit beside it. A cash-out refinance replaces your mortgage with one larger loan. If you like the rate you have now, a HELOC keeps it.
Is HELOC interest tax-deductible?
In some situations, when the money is used to buy, build or substantially improve the home. Ask a tax professional about yours.
Can I get a HELOC on a rental or a second home?
Some lenders offer them, with stricter requirements than on the home you live in. Your loan officer can tell you what’s available.
Will checking my options affect my credit?
Answering a few questions doesn’t check your credit. A credit check comes later, only with your permission, and your loan officer can explain how it may affect your score.
What if I don’t qualify?
Your loan officer can look at a cash-out refinance or a smaller line, and explain what would change the answer.
What does a HELOC cost?
Some lines have closing costs, an appraisal or an annual fee, and some lenders cover part of them. Your disclosures list every cost before you sign.
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Borrow when you need it.
Keep the mortgage you have.
Charles shows you how a line of credit would work alongside the mortgage you have.
(949) 674-0754