What is a first-lien HELOC?
A home equity line of credit (HELOC) can be utilized in a couple different ways. Most commonly, a property owner with an existing mortgage obtains a HELOC in a second-lien position to pay off other debts or make improvements. The first-lien lender retains priority over the second-lien lender when it comes to repayment of debt.
A HELOC can be a first-lien loan, however, if the property owner uses it to pay off an existing mortgage or if they already own the home outright. There are advantages to first-lien HELOCs, including tax-deductible interest and the ability to tap into home equity whenever needed.
Who offers first-lien HELOCs?
These loans are available through many types of institutions, including major banks and credit unions, nondepository private lenders and even hard money lenders. First-lien HELOCs are often available for amounts that exceed conforming loan limits or borrowers who lack prime credit characteristics. They also can have longer draw periods and lower interest rates compared to second-lien loans.
Visit LenderSearch.com to find first-lien HELOC lenders that match your client’s needs, including prime, Non-QM and hard money options.