How can I combine a HELOC with my mortgage?

Whether you are trying to get a HELOC while you still have a mortgage or are trying to consolidate your HELOC and current mortgage under a new one, there are options for combining your HELOC and mortgage either way. 

A HELOC, or home equity line of credit, typically gives you a line of credit based on the home equity you have built up in your home. While you have this line of credit, you will make payments on the amount you withdraw. You can make additional draws on your line of credit as you pay back the amount you withdraw and interest. 

A HELOC with Rate is slightly different. Through our HELOCs, you will get a lump-sum amount upfront. As you start to pay down your borrowed amount, you will have the ability to access additional funds. 

Start taking advantage of a HELOC with your home mortgage by filling out a HELOC application today! 

​Many borrowers choose to get a HELOC alongside their home mortgage. A HELOC lets borrowers access their home equity without needing to sell their house. 

Of course, since your borrowing power is based on your home’s equity, if you choose to get a HELOC while you have a mortgage, the amount you will be able to access will not be as high as if your mortgage were paid off. 

Your home’s equity is the amount of your home you outright own. It can be determined by the difference between the current value of your home and what is left on your mortgage. 

​If you are looking to consolidate your mortgage and HELOC payments into one monthly payment, you could consider using a cash-out refinance*. 

A cash-out refinance will refinance your original mortgage to a higher amount, allowing you to borrow more than what you currently owe. You can use the amount you get from a cash-out refinance to help pay off part or all of your mortgage and HELOC, potentially leaving you with one monthly payment. 

When you apply for your cash-out refinance, lenders will check your loan-to-value (LTV) ratio, which will show them your total debt. This will include your remaining mortgage and HELOC balance. You can borrow up to 80% of your home’s current value, minus your existing HELOC and mortgage balances. 

Something to consider when finalizing your cash-out refinance is that you will have to pay any closing costs. These closing costs can be from 2% to 6% of your loan amount. Closing costs will cover appraisals, title fees and any other administrative expenses. 

A major alternative for a HELOC that you could get alongside your home mortgage is a home equity loan. 

A home equity loan is a second mortgage that gives you a lump-sum based on the difference between your home’s current market value and remaining mortgage balance. Your home equity loan could be used for any expenses you may have. Many borrowers choose to use the funds they receive for debt consolidations, investment or second properties, education expenses and home renovations. 

Yes, you can refinance your HELOC. Depending on what you are looking for, refinancing a HELOC is an option if you hope to get a lower interest rate, switch to fixed rate, extend the time you can make draws or increase your limit. 

Refinancing a HELOC will change the terms and match current interest rates. If you refinance when interest rates are lower than they were when you got your original mortgage, your rates will drop. This could potentially lower your monthly payments and the total amount you will have to pay over the life of your loan. 

Switching to a fixed rate from an adjustable rate is another reason borrowers choose to refinance their HELOC. Adjustable rate HELOCs can vary the amount you pay from month to month, which makes planning your monthly payments difficult. For more stability, you could switch your HELOC to a fixed rate through a refinance. 

A HELOC refinance could also extend your draw length or increase your limit. If you are looking to extend your draw period, a refinance will restart your HELOC, giving you more time to make draws and push back when you will need to start paying back your loan amount. If your home has increased in value since your original HELOC, a refinance can raise your draw limit. 

You can start the HELOC process by filling out an application online. There are a few things you can do to help prepare yourself for the HELOC application. 

Before you start your application, you can check your credit score, income and current mortgage balance. These are some of the things a lender will need to finalize your application. Once you have them together, you should be ready to begin your HELOC application. 

_{Applicant subject to credit and underwriting approval. Restrictions apply.} 

_{Information provided is for educational purposes only. It should not be construed as financial or legal advice or instruction. Rate does not guarantee or assume liability for the accuracy, completeness or timelines of the information. You should conduct additional research before making any mortgage related decisions.} 

_{*Using funds from a Cash-out Refinance to consolidate debt may result in the debt taking longer to pay off as it will be combined with borrower’s mortgage principle amount and will be paid off over the full loan term. Contact Rate for more information.}