Equity and specialty
Home equity line of credit
Draw what you need, when you need it, and pay interest only on the drawn balance. The right answer for most homeowners sitting on a low first-mortgage rate.
How the home equity line of credit works
A HELOC is a second lien. Your original mortgage stays untouched at its original rate, and the line sits behind it, available to draw against like a credit card secured by your house.
The typical structure is a ten-year draw period where you can borrow and repay freely, followed by a twenty-year repayment period where the balance amortizes. Rates are usually variable and tied to the prime rate.
Because closing costs are low and often waived, a HELOC is inexpensive to set up and leave sitting unused. Plenty of our clients open one as a standing emergency reserve and never draw a dollar.
What you get with us
Not program features. The things our office does on every file of this type.
Low or no closing costs
Most HELOC files close with minimal fees, which is why an unused line is cheap to keep open.
Interest only on what you draw
A $100,000 line with nothing drawn costs nothing in interest.
Draw period flexibility
Borrow, repay, borrow again for ten years without re-applying.
Rate cap disclosed up front
Variable does not mean unlimited. We show you the lifetime ceiling in writing.
First mortgage untouched
Your 3% rate from a few years ago stays exactly where it is.
Fixed-rate lock option
Many lines allow you to convert a portion of the balance to a fixed rate.
Step by step
Six stages, and what each one actually asks of you.
Equity check
We estimate value from recent sales and calculate your likely line size.
Application
Shorter than a mortgage application. Income, credit and property details.
Valuation
Often an automated valuation rather than a full appraisal, which saves time and cost.
Underwriting
Combined loan-to-value and debt ratio reviewed against the fully drawn line.
Closing
Sign, wait three business days, and the line is available.
Draw
Transfer funds online or with the checks issued against the line.
Why people choose it
Pay for what you use
No interest accrues on an undrawn line.
Protects your first rate
The existing mortgage is not refinanced or repriced.
Reusable
Repay a draw and the credit becomes available again.
Cheap to hold
An unused line is a low-cost emergency plan.
What moves your pricing
Six levers underwriting actually looks at. Two of them you can change before you apply.
| Factor | How it affects you |
|---|---|
| Combined loan-to-value | First mortgage plus the line, against the home's value. |
| Credit score | 660 is a common floor, with better pricing above 720. |
| Prime rate | Variable HELOC rates move with prime. |
| Draw period length | Ten years is standard, some lenders offer five. |
| Property type | Primary residences qualify for the largest lines. |
| Income documentation | Full documentation is still required despite the lighter process. |
Programs people compare this with
- Cash-out refinanceReplace your mortgage with a larger one and take the difference in cash at closing.Compare
- Rate and term refinanceReplace your current loan with a better rate, a shorter term, or both. No cash out.Compare
- Conventional loanThe workhorse loan for buyers with steady income and reasonable credit. Down payments start at 3%.Compare
Questions about this program
The line closes to new draws and the outstanding balance converts to an amortizing payment over the repayment period, typically twenty years. Your payment will increase at that point, and we put the date on your calendar at closing.
Usually variable, tied to prime plus a margin, with a lifetime cap disclosed at closing. Many lines let you lock a portion at a fixed rate.
Yes, and many clients do exactly that. Check whether your line has an annual fee, which some carry and some do not.
It appears as a revolving account. A large drawn balance relative to the limit can affect utilization, similar to a credit card.
Magnolia Lending Group
Ready to look at a home equity line of credit?
A pre-approval takes about four minutes to start and one business day to issue. No cost and no obligation.
Free consultation. Sample rates and assistance amounts shown on this site are illustrations, not offers.