A Home Equity Line of Credit and Second Mortgages
A Home Equity Line of Credit (HELOC) features variable rates and continuing access to funds.
- 30 year Variable Rate (Index plus Margin)
- 10 year Initial Interest Only Draw Period with a 20-year fully amortizing repayment period.
- Use it to Refinance cash out of your home while keeping your existing first mortgage.
- Use to Purchase a home. So that means you get a first and this second mortgage behind it.
- Owner Occupied and 2nd homes only.
- Maximum Line amount $500,000
Interest rates have been at historic lows, so most homeowners have locked in historically low interest rate on their first mortgage. But for those that want to access the equity in their home, an Equity 2nd mortgage might be a good option for them.
That gives you the opportunity to pay off or down credit card or auto loans. It’s also a chance to support your kids with their education, help aging parents or invest in that exciting new opportunity. Whatever drives you, this is your chance.
A second mortgage is an additional loan taken out against a property that is already mortgaged.
These loans can be in the following forms
Equity loan: which is a lump-sum loan with a fixed term and rate or
- 20 or 30 year Fixed rate rate loans
- Use it to Refinance cash out of your home while keeping your existing first mortgage
- Use it to Purchase a home. So you that means you get a first and this second mortgage behind it.
- If you Occupy your residence, then based on your appraised value and qualifying income you could get:
- between 90 – 95% combined loan-to-value of the equity if your mid credit score is over 700+
- between 85 – 90% combined loan-to-value if your mid credit score is 680 – 699
- between 70 – 85% combined loan-to-value if your mid credit score is between 640 – 679
- up to 70% combined loan-to-value if your middle credit score is at least 620
- Investment properties not permitted.
- 2nd homes up to a maximum of 75% loan-to-value.
- Minimum loan amount $100,000
- Maximum loan amount of $500,000
The processing is a little bit more streamlined compared to a applying for a mortgage in the first position.
4 Documents needed for Initial Underwriting
- Income Documents
- Homeowners Insurance
- First Mortgage Statement
- Photo ID
Top Reasons to Get a 2nd Mortgage
Low interest rate on your first mortgage and you don’t want to refinance it
If the interest rate on your first mortgage is low and you want to get equity out of your property a Home Equity Line of Credit or Home Equity Loan is a good way to go
Need cash for a short time
If you need access to cash for a limited time then a 2nd mortgage could be a good option because you can pay if off when you can.
Pay off high interest rate existing debt
If you are carrying high interest credit cards, you might be better off getting a 2nd mortgage to consolidate the debt, and possibly reduce your monthly payment.
Buy a home
Use a second to help you buy a property.
Home Equity Line of Credit compared to a Home Equity Loan
Home Equity Line-of-Credit (HELOC)
Home Equity Loan (HELOAN)
|Adjustable Rates Tied to Prime||Fixed Rates|
|Use and Reuse for 10 years||One Time Use- Fully Funded at Closing|
|$50,000 Minimum Draw||$100,000 Minimum Loan Amount|
|Investment Properties permitted on Fixed Rate products.||Investment Properties (1-2 unit) up to 70% of the combined loan to value (based on an appraisal) on fixed rates only.|
|1 Unit and Condominiums||1-2 Units and Condominiums|
|Prior-Use Appraisal Up To 4 Months||Prior-Use Appraisal Up to 12 Months|
HELOC and HELOAN (Rules for Both)
This apply to Purchase, Refinance Piggyback or Standalone Loans Available
Credit Scores as Low as 640
Drive-by Appraisal Only for Loan Amounts <= $250,000, Otherwise Full Appraisal
Max Loan Amount is $500,000
Max Total Financing is $2 Million (Between 1st and Our 2nd)
No Cash Reserves Required
No Asset Verification
No HOA Cert or Condo Project Docs Needed
All loans Subject to Qualification