HELOC and Home Equity Loan Signings Explained

Home Equity Lines of Credit (HELOCs) and fixed-rate home equity loans both use your house as collateral, but the paperwork and the signing experience are not identical to a first-lien refinance.

HELOC basics

A HELOC is a revolving line of credit secured by your home. You will sign a credit agreement, a mortgage or deed of trust, disclosures, and a Notice of Right to Cancel if it is on your primary residence.

Fixed home equity loans

These look more like a traditional second mortgage — a Note, a Mortgage, and the usual disclosures. The signing is typically shorter than a first-lien refinance.

Things to double-check

Variable interest rate index and margin (for HELOCs), draw period vs. repayment period, minimum draw requirements, prepayment penalty language, and any annual or inactivity fees. These are the questions to bring to your loan officer before the signing, not to your notary.

Right to cancel

If the property is your primary residence, you have the same three-business-day rescission right as a refinance. Hold onto your Notice of Right to Cancel and do not destroy it.