Second mortgages let you tap home equity without replacing your first loan—either as a closed-end second mortgage with a fixed rate, or a Home Equity Line of Credit (HELOC) with flexible draws and a variable rate.
Closed-end seconds are predictable, with fixed rates and payments, and ideal for one-time projects, while HELOCs work well for ongoing or uncertain expenses by providing flexible access to funds. With a HELOC, you can draw money as needed, repay it, and borrow again. HELOC interest rates are typically tied to the prime rate plus a fixed margin, meaning the rate can fluctuate over time as the prime rate changes.
While second liens can be convenient, they often carry higher interest rates than a cash-out refinance, and in some cases, a cash-out refinance can still make sense even if your current first mortgage rate is very low. This approach pays off your existing mortgage and replaces it with a single loan in the first position, which may result in better overall terms, simplified payments, and fewer lenders holding liens on your property.
That’s why every scenario is different—the best option depends on your goals, total cost, and how long you plan to keep the loan.
If you’re considering using your home’s equity, let us help you determine the best strategy for your financial goals.
Contact GuardHill today to be matched with a mortgage specialist and experience a simpler, more streamlined mortgage process.
