01
HELOC (Home Equity Line of Credit)
A revolving credit line secured by your home. Draw what you need, pay interest only on the balance during the draw period (typically 10 years), then a fixed repayment period of 15–20 years.
- Variable rate tied to Prime, adjusts monthly
- Interest-only payments during the draw period
- Up to 85–90% combined loan-to-value (CLTV) on primary residences
- Closing costs usually low ($0–$2,000)
- Best for: renovations, bridge financing, tuition, or an emergency reserve
02
HELOAN (Fixed-Rate Second Mortgage)
A one-time lump sum, fixed rate, fixed term (typically 10–30 years). Higher rate than a HELOC in most environments, but the payment is predictable and the rate can't rise.
Best for: a known one-time expense (major renovation, debt consolidation, tax bill) where you want certainty over flexibility.
03
Cash-out refinance
Replaces your entire first mortgage with a new, larger one. Only makes sense when your existing first-mortgage rate is at or above current market rates, or when you need a large cash amount and the blended math still works.
If your first is in the 3%s or 4%s, a HELOC or HELOAN almost always wins on total cost, even at higher second-mortgage rates, because you don't touch the low first.
04
Reverse mortgage (HECM)
For homeowners age 62+. Converts equity into tax-free cash without a monthly mortgage payment. The loan is repaid when the last borrower moves out, sells, or passes.
- No monthly payment required (taxes and insurance still your responsibility)
- Line of credit, lump sum, monthly tenure, or hybrid
- Non-recourse: you or your heirs never owe more than the home is worth
- Best for: retirees who want to age in place, delay Social Security, or supplement retirement income
Reverse mortgages are heavily misunderstood. The FHA-insured HECM program has strong consumer protections, mandatory counseling, and, for the right household, is a powerful retirement tool.
05
How to choose
- One-time expense, low first-mortgage rate → HELOAN
- Ongoing or uncertain need, low first-mortgage rate → HELOC
- Large cash need and first mortgage at market rate → Cash-out refinance
- Age 62+, want to eliminate mortgage payment → Reverse mortgage
- Debt consolidation → depends on amount and current first rate; almost always a HELOAN if the first is under 5%
FAQ
Common questions
- How much equity can I access?
- Most programs go to 80–90% combined loan-to-value on primary residences. On a $1M home with a $500,000 first mortgage, that's typically $300,000–$400,000 of accessible equity.
- Are HELOC rates fixed or variable?
- Almost always variable, tied to Prime. Some HELOCs allow you to lock a portion of the balance at a fixed rate — worth asking about.
- Is HELOC interest tax deductible?
- Only if used for home improvement on the property securing the loan (per current tax law). Interest on a HELOC used for other purposes is not deductible. Talk to your CPA for your specific situation.
- Can I get a HELOC on a rental property?
- Yes, but far fewer lenders offer them. Rates are higher and CLTV caps are lower (usually 65–75%).
- How long does a HELOC take to close?
- Typically 3–5 weeks. Some digital-first lenders close in as little as 10 days on straightforward files.
Have a scenario you want walked through?
Every file is different. If you'd like a straight, no-pressure read on your numbers, send them over and Mark will personally review them.