The Draw Period Ends. The Payment Jumps.
Fold an existing line of credit into new financing before the payment changes, on whichever route your file qualifies for.*
Quick answer
Saxton Mortgage does. On at least one conventional program we offer, paying off a second lien that was used to buy the home can be done as a limited cash-out refinance, as long as the lender documents that the entire second lien went toward buying the property. If the line was not used to buy the home, the refinance must be treated as a cash-out refinance, and at least one borrower must have been on title for at least six months.
One question changes the price.
Whether this is a limited cash out or a cash out depends on what the line of credit was originally used for. Nothing else.
- A junior lien used to buy the property can sit in a limited cash out*
- A line taken later makes the transaction a cash out*
- Limited cash out prices better than cash out*
- Purchase-money HELOCs can fold into a limited cash-out refi under Fannie Mae rules
- Cash back on a limited cash-out stays within the greater of 1% or $2,000
- A new second lien is sometimes the better answer
Classified as a limited cash out or a cash out, depending on the line*
A junior lien taken to buy the property can be paid off in a limited cash out*
A line taken later is treated as a cash out instead*
Limited cash out prices better than cash out*
Purchase-money lines stay limited cash-out
A new second can replace the line
What is Saxton HELOC Consolidation?
Replacing a first mortgage and an existing line of credit with one loan
A home equity line of credit has a draw period, and when it ends the loan starts amortizing. The payment often rises sharply on a known date. Consolidating folds the line into new first mortgage financing before that happens.
Two things decide this one: when your draw period ends, and what the line of credit was originally used for. The first sets the timing and the second sets the price.
The important part is the classification. If the line was taken out to buy the property, paying it off can sit inside a limited cash out refinance. If it was taken later, for anything else, the transaction becomes a cash out and prices accordingly. That single fact is worth real money.*
Why choose Saxton HELOC Consolidation?
Built for owners whose draw period is ending on a date they already know.
A Known Date
Unlike most refinance triggers, this one is on a calendar. You can see the payment change coming years ahead.
Purpose Sets The Price
A line used to buy the home can be folded into a limited cash out. A line taken later makes it a cash out.*
One Payment, One Rate
A line of credit carries a variable rate. Consolidating into a first mortgage can replace it with a fixed one.
Check The First Rate
If the first mortgage carries a low rate, replacing it to absorb the line can cost more than it saves. Compare before you commit.
A Second Line Instead
Sometimes the better answer is a new second lien rather than replacing the first mortgage at all.
Deferred Balances Differ
A deferred balance sitting as a second lien is treated differently from an ordinary junior lien. Say so early.*
Hear From Homeowners Like You
Frequently Asked Questions
Straight answers about folding a line of credit into your mortgage.
Saxton Mortgage does. On at least one conventional program we offer, paying off a second lien that was used to buy the home can be done as a limited cash-out refinance, as long as the lender documents that the entire second lien went toward buying the property. If the line was not used to buy the home, the refinance must be treated as a cash-out refinance, and at least one borrower must have been on title for at least six months.
Consolidating a HELOC trades a line whose monthly payment can change for one new loan with a set structure. Fannie Mae also lets a new first mortgage pay off a HELOC sitting in first-lien position.
Yes. Fannie Mae lets a limited cash-out refi pay off only a line that financed the purchase itself. A line spent on anything else turns the refinance into cash-out. Only a PACE loan or similar energy-upgrade debt gets an exception.
Consolidating a HELOC counts as cash-out under Fannie Mae rules unless the lender documents that the entire line paid for the property. Cash-out also requires a borrower who has owned the home a half year before the new loan disburses.
You can keep the first mortgage and replace only the HELOC with a new second lien, which one program allows when the new line pays off the existing junior lien. Another lender’s fixed-rate second lien closes in second position behind your current first mortgage.
Yes. In one program, a fresh HELOC may retire the old line, but that payoff is not permitted in Nevada, Rhode Island or West Virginia. Another program accepts an open line in draw status if it is retired before or at closing.
Standard documentation for the new loan: income, assets and credit, plus the paperwork on the existing line so its original purpose can be established.*
Begin a few months before the draw period ends, because one lender rejects credit and income paperwork older than 120 days at signing. A different lender lets documents and appraisals expire after 60 days, so timing the application matters.
Find out what you qualify for
Send us your HELOC statement and the date your draw period ends, and we will lay a refinance next to a new second-lien option.
Get Pre-Qualified- Consumer Financial Protection Bureau, home equity loan compared with a HELOC
- Consumer Financial Protection Bureau, mortgages
*Loan amounts, rates, terms, and down payment requirements are subject to credit approval, income and asset verification, and program eligibility. Whether paying off an existing junior lien qualifies as a limited cash-out refinance or as a cash-out refinance depends on the original purpose of that lien and on program requirements. Deferred balances held as a second lien are treated separately. Not all applicants will qualify. Saxton Mortgage, LLC is an Equal Housing Lender.