HELOC FAQs
Home Equity

Home Equity Lines, Home Equity Loans, Second Mortgage

by Nancy Osborne, COO of ERATE®

Appraisals

• Will an appraisal of my property be required when I apply (even if I've had my property appraised within the last year)?
  
  

Cash-out Loans

• Is it better to refinance my first mortgage to take cash out rather than getting a second mortgage on my property?

Closing Costs

• What type of closing costs are associated with second mortgages?
  
  
• Can I get a no cost home equity loan?
  
  (Home Equity Line with Zero Closing Costs)

Home Equity Lines

• What is the difference between a traditional second mortgage and a home equity line of credit?
  
• Is it better to refinance my first mortgage to take cash out rather than getting a second mortgage on my property?
  
  
• What are the typical terms of a home equity line of credit?
  
  
• What is the average repayment period on a home equity line of credit?
  
  
• Can I use the proceeds of the home equity loan for any purpose I choose, such as the purchase of an automobile?

Home Improvement Considerations

• When making improvements to my home, is it wise to first consult with my real estate agent?
  
  
• When making improvements to my home, how do I find a qualified, reputable architect?
  
  
• When making improvements to my home, how do I find a qualified, reputable contractor?
  
  

Investment/Rental Property

• Can I apply for a second mortgage secured against an investment or rental property?
  
  

Loan Amount

• What is the maximum I can borrow on a home equity line?
  
  

Loan Documentation

• What documentation will the lender normally require from me to process my loan?
  
  
• Are limited documentation (aka EZ doc, no income qualifier) loans available?
  
  

Loan Process

• What documentation will the lender normally require from me to process my loan?
  
  
• Are limited documentation (aka EZ doc, no income qualifier) loans available?
  
  

Loan Selection

• How do I determine which type of secondary home equity financing is best for me?
  
  

Loan Terms

• What are the typical terms of a home equity line of credit?
  
  
• What are the typical terms of a traditional second mortgage?
  
  
• What is the average repayment period on a home equity line of credit?
  
  
• What is the average repayment period on a traditional second mortgage?
  
  
• Can I use the proceeds of the home equity loan for any purpose I choose, such as the purchase of an automobile?
  
  

No Cost Loans

• Can I get a no cost home equity line?
  
  

Pre-payment Penalties

• Do home equity lines typically have prepayment penalties?
  
  

Second Mortgage

• What is the difference between a traditional second mortgage and a home equity line of credit?
  
  
• Is it better to refinance my first mortgage to take cash out rather than getting a second mortgage on my property?
  
  
• What are the typical terms of a traditional second mortgage
  
  
• What is the average repayment period on a traditional second mortgage?
  
  
• Can I use the proceeds of the home equity loan for any purpose I choose, such as the purchase of an automobile?
  
  

Tax Considerations

• Can I use the proceeds of the home equity loan for any purpose I choose, such as the purchase of an automobile?
  
  
• Are the interest payments on my home equity loan tax-deductible?
  
  
• How can I find a qualified, reputable CPA to advise me?

Nancy Osborne has had experience in the mortgage business for over 20 years and is a founder of both ERATE, where she is currently the COO and Progressive Capital Funding, where she served as President. She has held real estate licenses in several states and has received both the national Certified Mortgage Consultant and Certified Residential Mortgage Specialist designations. Ms. Osborne is also a primary contributing writer and content developer for ERATE.

"I am addicted to Bloomberg TV" says Nancy.