Home Equity Financing
Tap Your Home Equity — Second Mortgages & HELOCs
Your home is likely your largest asset. A second mortgage or home equity line of credit lets you access that built-up value — for renovations, debt consolidation, investments, or major life expenses.
Talk To An ExpertWhat Are Second Mortgages & HELOCs?
Home Equity Loan (Second Mortgage)
A home equity loan is a fixed-rate, lump-sum loan secured by your home's equity. You receive the full amount at closing and repay it in equal monthly installments over a set term. Because the rate is fixed, your payment never changes — making budgeting straightforward.
HELOC (Home Equity Line of Credit)
A HELOC is a revolving credit line — similar to a credit card but secured by your home. During the draw period you borrow only what you need, when you need it, and pay interest only on the outstanding balance. After the draw period ends, the balance converts to a repayment phase.
How equity is calculated: Home equity = current appraised value − outstanding mortgage balance(s). For example, a home worth $500,000 with a $300,000 first mortgage has $200,000 in equity. Most lenders allow you to borrow up to 80–85% of your home's value across all loans combined (Combined LTV).
Home Equity Loan vs. HELOC
Side-by-side comparison to help you choose the right product.
| Factor | Home Equity Loan | HELOC |
|---|---|---|
| Loan Structure | Lump sum disbursed at closing | Revolving credit line — draw as needed |
| Interest Rate | Fixed rate for life of loan | Variable rate (tied to Prime Rate) |
| Repayment | Fixed monthly payments from day one | Interest-only during draw period; then principal + interest |
| Draw Period | N/A — funds received at closing | Typically 5–10 years |
| Repayment Period | 5–30 years | 10–20 years after draw period ends |
| Best For | One-time large expenses with known cost | Ongoing or uncertain expenses, flexibility |
| Closing Costs | Typically 2–5% of loan amount | Often lower; some lenders waive fees |
| Tax Deductibility | Interest may be deductible if used for home improvement | Same — consult a tax advisor |
Common Uses for Home Equity
Your equity can work for you in many ways.
Home Improvements
Kitchen remodels, bathroom upgrades, additions, or energy-efficiency projects that increase your home's value.
Debt Consolidation
Replace high-interest credit card debt or personal loans with a lower-rate home equity product — reducing monthly payments.
Investment Property
Use your primary home's equity as a down payment on a rental property or investment opportunity.
College Tuition
Fund education expenses with a predictable fixed-rate home equity loan or a flexible HELOC draw schedule.
Business Capital
Self-employed borrowers may use home equity to fund business operations, equipment, or expansion.
Emergency Fund
A HELOC provides a safety net — available when you need it, with no interest charged until you draw.
Rate Structures: Fixed vs. Variable
Understanding how your rate is set helps you choose the right product for your risk tolerance.
Fixed Rate (Home Equity Loan)
Your rate is locked at closing and never changes. Ideal when you want predictable payments and protection from rising rates.
Variable Rate (HELOC)
Rate adjusts periodically based on the Prime Rate. Starts lower than fixed rates but can rise. Some HELOCs offer a rate-lock option on drawn balances.
Hybrid HELOC
Some lenders offer HELOCs with a fixed introductory rate or the ability to convert portions of the balance to fixed-rate sub-accounts.
How to Qualify
Lenders evaluate several factors when reviewing a second mortgage or HELOC application.
Who Is This For?
Homeowners with Significant Equity
If you've owned your home for several years or made a large down payment, you likely have equity available to put to work.
High-Interest Debt Holders
Consolidating credit card balances or personal loans into a lower-rate home equity product can save thousands in interest.
Renovation Planners
Homeowners planning phased improvements benefit from a HELOC's flexibility — draw funds as each project phase begins.
Conservative Borrowers
Those who prefer predictability choose a fixed-rate home equity loan — same payment every month, no surprises.
Ready to Access Your Home Equity?
Our home equity specialists will help you compare a second mortgage vs. HELOC, calculate your available equity, and find the product that fits your goals and budget.
Talk To An Expert