Home-equity pages explain how homeowners borrow against the value they have built in a property without necessarily replacing the first mortgage. This section is about second-lien borrowing structures and how they differ from refinancing.
Start with Second Mortgage for the broad structure, then compare Home Equity Loan with Home Equity Line of Credit (HELOC) to understand the difference between fixed lump-sum borrowing and revolving access to equity.
For HELOC users, this section also breaks out Draw Period, Repayment Period, Credit Limit, and Line Freeze so the revolving-credit structure is easier to understand in practical terms.
In this section
- Second Mortgage
A second mortgage is a loan secured by a home that sits behind the first mortgage in lien priority.
- Home Equity Loan
A home equity loan is a second-lien loan that lets a homeowner borrow a lump sum against built-up home equity.
- Home Equity Line of Credit (HELOC)
A HELOC is a revolving home-equity credit line secured by the property, usually in a second-lien position.
- Draw Period
Draw period is the phase of a HELOC during which the borrower can borrow, repay, and borrow again up to the available limit.
- Repayment Period
Repayment period is the later phase of a HELOC when the borrower is expected to pay down the outstanding balance rather than continue drawing freely.
- Credit Limit
Credit limit is the maximum amount available under a HELOC or similar revolving home-equity line.
- Line Freeze
A line freeze is a restriction that temporarily prevents or limits new borrowing under an existing HELOC.