Closed-end second mortgage benefits & guidelines
Based on the equity in your home, a closed-end second mortgage provides a lump-sum that you can use to make home improvements, consolidate debt or cover other major expenses. It offers a straightforward repayment plan and eliminates the uncertainty of revolving credit.
Why choose a closed-end second mortgage?
A closed-end second mortgage often has a lower interest rate than other equity options. And unlike revolving credit lines, these are one-time loans, providing a clear repayment structure to help you stay on track.
Closed-end second mortgage guidelines
To qualify for a closed-end second mortgage, you will need:
- Minimum credit score of 680
- Home appraisal to confirm market value
- Manageable debt-to-income (DTI) ratio
Closed-end second mortgages feature fixed terms and a set loan amount that you cannot adjust once the lender approves the loan. However, be aware that there may be penalties for paying off the loan early.
How to apply for a closed-end second mortgage
Applying for a closed-end second mortgage is simple with Rate’s Digital Mortgage. Follow these steps.
1. Review your finances
Check your credit score, income, DTI ratio and cash on hand for a down payment.
2. Gather key documents
You’ll need to provide income verification, tax returns, asset statements and personal identification.
3. Apply online
Once you submit your application, your Loan Officer will help you from there.
“The Guaranteed Rate Team was very easy to work with! Information was clear and all available through my portal for review at all times. Additionally the team was very responsive to any and all questions we had along the way.”
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Applicant subject to credit and underwriting approval. Not all applicants will be approved for financing. Receipt of application does not represent an approval for financing or interest rate guarantee.
Restrictions may apply, contact Rate for current rates and for more information. All information provided in this publication is for informational and educational purposes only, and in no way is any of the content contained herein to be construed as financial, investment, or legal advice or instruction.
Rate, Inc. does not guarantee the quality, accuracy, completeness or timelines of the information in this publication. While efforts are made to verify the information provided, the information should not be assumed to be error free. Some information in the publication may have been provided by third parties and has not necessarily been verified by Rate, Inc.
Rate, Inc. its affiliates and subsidiaries do not assume any liability for the information contained herein, be it direct, indirect, consequential, special, or exemplary, or other damages whatsoever and howsoever caused, arising out of or in connection with the use of this publication or in reliance on the information, including any personal or pecuniary loss, whether the action is in contract, tort (including negligence) or other tortious action.
Available as closed end, fixed rate, second lien. Eligibility for second home and investment properties allows for only 10 total financed properties. The total of first and second liens cannot exceed $3M. No more than two mortgage liens are permitted on a single property. Financing subordinate to the new second lien is not permitted. First lien mortgages must be fully amortizing, fixed rate or adjustable rate mortgage loans only. Minimum down payment and FICO score requirements apply and impact total loan amount available from $50,000 to $500,000. Maximum debt to income cannot exceed 50%. State and product restrictions vary so talk to your loan officer about what options may be available to you. Additional restrictions apply. Not all applicants will be approved. Applicant subject to credit and underwriting approval. Not a commitment to lend. Contact Rate for more information.