HELOC & SECOND MORTGAGES

A closed-end second, often called a home equity loan, is opened well after you already own the home and have an active first mortgage. Like a standalone HELOC, it requires a completely separate, independent application process and its own home appraisal, and it can be acquired from a totally different lender than your first mortgage.

It funds as a single lump sum secured by a second lien on your property. You receive the full amount at closing, the interest rate is fixed for the life of the loan, and the payment stays the same from the first month to the last. Terms are commonly offered from ten to thirty years.

The structural difference from a HELOC is that nothing revolves. Once the loan funds, you cannot re-draw the principal you repay. In exchange you get predictability: no index, no margin, no payment surprises if rates climb. Every payment includes principal, so the balance actively shrinks on a known schedule.

Like a HELOC, a closed-end second leaves your existing first mortgage in place. Homeowners consolidating higher-interest revolving debt frequently choose this route, since converting variable-rate balances into a fixed, amortizing payment produces a clear payoff date instead of an open-ended minimum payment.

• You know the exact amount you need up front
• You want a fixed rate and a fixed payment
• You are consolidating credit cards or other high-rate debt
• You are funding a single large project, purchase, or buyout
• You want a defined payoff date rather than a revolving balance

• Funding: revolving draws versus one lump sum
• Rate: usually variable and index-based versus fixed for the full term
• Payment: HELOC draw and repayment methods vary by agreement; fixed-rate closed-end seconds generally require principal-and-interest payments
• Flexibility: reuse of repaid principal versus no re-draw once funded
• Potential use: ongoing or unknown needs versus a known one-time need

Both structures put your home up as collateral. Compare available rates, fees, repayment terms and total borrowing costs against unsecured alternatives; secured borrowing is not necessarily cheaper. Consider payment changes under a rising-rate HELOC scenario and the risk of foreclosure.

A piggyback HELOC is a revolving second lien that may close concurrently with a first mortgage on a purchase or refinance. Documentation and underwriting requirements for each lien depend on the participating lenders and programs; a separate application or review may be required.

This structure is also known as an 80/10/10 or 80/15/5 loan structure. On a purchase, the first number is the first mortgage as a percentage of the price, the second is the HELOC, and the last is your down payment. On a refinance, the HELOC is layered in behind the new first lien at the same closing table.

A piggyback HELOC may provide a revolving line, subject to the agreement and lender restrictions. Compare the combined rates, fees, payment changes and total costs of both liens against a single larger first mortgage; neither structure is necessarily cheaper.

• Credit, line amounts, combined loan-to-value and debt-to-income requirements vary by program
• Draw, repayment and initial-advance terms depend on the agreement
• Valuation, occupancy and transaction eligibility require lender review

*Subject to first lien restrictions.

The information provided above is for general educational and informational purposes only and should not be interpreted as a commitment to lend, preapproval, underwriting approval, or financial advice. Loan programs, eligibility requirements, interest rates, debt-to-income ratios, mortgage insurance premiums, and financing terms may vary based on borrower qualifications, credit profile, occupancy, property type, loan amount, and applicable underwriting guidelines.

All mortgage loans are subject to credit approval, property approval, verification of income and assets, and investor or lender underwriting requirements. Certain programs, including FHA, VA, Jumbo, and Conventional financing, may have additional restrictions or qualification standards.

Interest rates, APRs, loan terms, and program availability are subject to change without notice and may not be available at the time of loan commitment or lock-in. Mortgage insurance premiums and FHA program guidelines are established by HUD/FHA and may change periodically.

Westmount Financial Group Inc DBA WestFi is an Equal Housing Opportunity mortgage company. We fully comply with the Equal Credit Opportunity Act (ECOA), Fair Housing Act, and all applicable federal and state lending regulations.

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