QandAs: Loans

Can you convert a Home Equity Line of Credit into a Second Mortgage?

Answer:
In rare situations, some home equity lines of credit are structured so that borrowers can convert them into second mortgages

without having to take out a new loan. However, in most cases, those who wish to convert home equity lines of credit into second mortgage loans must go through the process and expense of applying for a new loan.

If you have a home equity line of credit and would prefer to switch it to a second mortgage, the first thing you need to do is check the fine print of the agreement for your line of credit. If there is no provision for converting to a true loan product, you will need to apply for a second mortgage loan for an amount sufficient to pay off the balance of your existing line of credit.

When you apply for a second mortgage, you will be required to complete an application form, and your credit history will be evaluated to determine if you are eligible to receive funding. Assuming you are approved, you will be responsible for paying all closing costs associated with the new loan.


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