Can You Refinance a HELOC? Your Options in Maine and Florida
By Travis Penny, mortgage broker ·
Most people who ask me this have had their line for a while. The draw period is winding down, or the balance has settled into something they'd like to plan around. Refinancing a HELOC is common, and a new line through my Florida HELOC or my Maine HELOC options is one way to do it.
Can you refinance a HELOC?
Yes. A HELOC is a home equity line of credit, and it sits behind your first mortgage as a second lien. When people talk about refinancing a HELOC, they usually mean one of two things.
- A new HELOC. A new line pays off the old one, and your first mortgage stays exactly where it is.
- A first mortgage refinance. A new first mortgage pays off both the old first mortgage and the HELOC, so you end up with one loan.
Both paths are open on the home you live in or your second home, in Maine or Florida. If the home is a rental, that's a different product, and my DSCR HELOC page covers it.
Why do homeowners refinance a HELOC?
The most common reason is the end of the draw period. During the draw period you can borrow from the line. When it ends, you can't draw any more, the balance moves into repayment, and your payment changes because you're now paying the balance down.
Other owners want a fixed rate instead of a variable one, or one loan instead of two.
Can I refinance a HELOC into a new HELOC?
Yes, in Maine and in Florida. The new line pays off the old line at closing, and your first mortgage stays untouched. If you like your first mortgage rate, you keep it and replace only the second lien.
Line sizes and draw rules depend on the program. On one HELOC program I use, lines run from $50,000 to $1,000,000, most of the line comes out at closing, and the rate on the line is variable. That suits a payoff, because the money drawn at closing goes to the old balance. I'll match your home to the program that fits before you apply.
The new line is a new loan, so it's reviewed from the start. Here's what I check first:
- Your first mortgage balance and the payoff on the old HELOC
- Your credit, since higher scores and smaller lines usually get more room
- How long you've owned the home, because some programs need 6 months of ownership on a second home or set a lower limit on a recently bought primary home
- Your hazard insurance, plus flood insurance in a flood zone
Can a first mortgage refinance pay off a HELOC?
Yes. A new first mortgage can pay off both your current first mortgage and the HELOC in one closing. Lenders look at how and when the line was used, and that can decide whether the new loan is treated as a cash out refinance.
The tradeoff is your first mortgage rate, because a refinance replaces it. If your current rate is lower than what the market offers now, keeping it and replacing only the line usually makes more sense. If your rate is already high, or one loan with one fixed rate matters more to you, the refinance can be the better move.
For a Maine home, my Maine refinance page walks through how a refinance works there, and I'll run it side by side with a new Maine HELOC.
Which path fits your home?
| Your situation | Usually fits |
|---|---|
| Your first mortgage rate is lower than current market rates | A new HELOC |
| You want to leave the first mortgage alone | A new HELOC |
| Your first mortgage rate is high | A first mortgage refinance |
| You want one loan with one fixed rate | A first mortgage refinance |
I run both paths against your numbers before you choose.
What can stop a HELOC refinance?
Eligibility depends on the program, so I check your property against it before anything is ordered. On one HELOC program I use, condotels, 55+ age-restricted communities, leasehold properties, modular homes and log homes don't qualify. Neither does a home listed for sale in the last 6 months, and rural second homes don't qualify either.
On that same program, foreign nationals and ITIN borrowers don't qualify, rural homes and properties over 2 acres have lower limits, and the cap is 10 acres. Other programs draw those lines differently, which is one reason I compare more than one.
What's the next step?
FAQ
Can you refinance a HELOC?
Yes, Travis Penny helps Maine and Florida homeowners refinance a HELOC on a primary or second home, either into a new HELOC or by paying it off with a refinance of the first mortgage. Which one fits depends on your first mortgage rate and your plans.
Can I refinance my HELOC into a new HELOC?
Yes, Travis Penny arranges HELOCs on Maine and Florida primary and second homes that can pay off an existing line at closing while your first mortgage stays in place. The new line is a new loan, so your credit, ownership time and insurance are reviewed from the start.
Can I pay off a HELOC with a refinance of my first mortgage?
Yes, Travis Penny can pay off a HELOC on a Maine or Florida primary or second home with a refinance of the first mortgage, leaving you one loan instead of two. That refinance replaces your current first mortgage rate, so it fits best when that rate is already high.
What happens when my HELOC draw period ends?
When the draw period ends on a HELOC for a Maine or Florida primary or second home, you can no longer borrow from the line and the balance moves into repayment, and Travis Penny can review whether refinancing it makes sense.
Can I refinance a HELOC on my second home?
Yes, Travis Penny arranges HELOCs on Maine and Florida second homes. Some programs need you to have owned the home for at least 6 months, and some don't take rural second homes, so he checks your home against the program before you apply.
Travis Penny, NMLS 1649161 | Vision Mortgage, NMLS 1286953. Subject to credit approval and underwriting. Programs and guidelines can change without notice. Equal Housing Opportunity.