A lump sum, without touching your first mortgage
A home equity loan — also called a closed-end second mortgage — lets you borrow against your home's equity in one lump sum at closing, with a fixed rate and a fixed repayment schedule. Your existing first mortgage stays exactly as it is.
For anyone holding a first mortgage at a rate they will not see again, it is often the most cost-effective way to reach their equity.
Who it fits
- Homeowners who want to keep a low-rate first mortgage
- One-time needs — a renovation, a debt payoff, a major purchase
- Borrowers who want a predictable, fixed payment
- Primary residences, second homes and investment properties
Full documentation or alternative income
Home equity loans are available with traditional income documentation, and on many programs with alternative documentation for self-employed borrowers — bank statements or a CPA-prepared P&L. On investment properties, a DSCR home equity loan qualifies on the rental's cash flow instead of your income.
How it is underwritten
The lender looks at the combined loan-to-value of both mortgages, your credit, your income and the property. On smaller loan amounts, some programs can value the home with an automated valuation instead of a full appraisal, which can shorten the timeline.
Home equity loan, HELOC or cash-out refinance?
A home equity loan suits a single, known need. A HELOC suits needs that come over time. A cash-out refinance can make sense when your first mortgage rate is close to today's anyway. We put the options side by side for your numbers.
Every file is different. Guidelines, pricing and eligibility vary by lender and are subject to credit approval and property eligibility — we’ll walk you through exactly what applies to yours.