house with key in door - HELOC

A Home Equity Line of Credit (HELOC) refinance is positioned as either 1st or 2nd liens on property. HELOCs are one of the only choices available for a 2nd loan behind an existing 1st loan. These loans are mostly used for primary homes, but they can sometimes be used to refinance rental properties as well. The ARM HELOCs are usually “open ended” loans, meaning that your loan balance and payment can go down or up during the life of the loan.  If you obtain a Fixed HELOC, then you can only pay your loan balance down. With a primary HELOC refinance loan you can get a higher LTV loan than with a rental HELOC refinance loan.

Loan Features

  • Secured against real estate as a 1st or 2nd lien
  • Great for borrowers who want to pay back these borrowed funds sooner rather than later
  • HELOCs can have a 15-30 year term
  • Interest accrues much like the interest on credit cards and payments are based on current balance.
  • HELOCs are typically an adjustable rate loan, but at the borrower’s option, they can be converted to a fixed rate loan.
  • Borrowers have the option to initially draw a smaller loan amount with a smaller payment.
  • Borrowers can draw off additional funds, as necessary, up to their maximum balance.

Loan Requirements

  • Maximum HELOC loan amounts are based on the allowable LTV and lender’s guidelines.
  • Monthly repayments of principal and interest are based on the loan balance during the draw period.
  • Remaining balance must be repaid during repayment period