loan library has added a first-lien home equity line of credit (HELOC) to its suite of products, which will allow homeowners without a mortgage to borrow against their home equity.
The First Lien HELOC program will allow borrowers to obtain equity in their homes with flexible terms that include a three-year drawdown period, a 10-year interest-only period, and, in most states, a 20-year amortized repayment period. said in a statement.
While many HELOCs are second-lien loans that require the homeowner to have an existing mortgage on their property, a first-lien HELOC is a line of credit secured by the home in which the lender holds the primary claim on the property.
“Homeowners are experiencing unprecedented levels of equity, especially those who are no longer mortgaged,” LDI Mortgage President Jeff Walsh said in a statement.
“However, even without a mortgage, many people are feeling the pressure of rising expenses, including insurance and property taxes, which puts more pressure on monthly budgets. That’s why we’ve added A first lien option to support customers throughout their home buying process, not just during the life of the mortgage.
A first-lien HELOC may be advantageous if a borrower needs flexible access to funding and the ability to handle variable interest rates. But if the borrower defaults, the lender can foreclose on the home because it holds the first lien.
loanDepot’s first-lien HELOC product is already available in seven states, including Arizona, California and Florida, and will be available in additional states by the end of 2024, the company explained.
The California-based lender launched a digital HELOC in November 2022, allowing homeowners to access $50,000 to $250,000 in equity through a 10-year interest-only line of credit, followed by a 20-year variable repayment term with no Prepayment penalty.
In its second-quarter earnings report, loanDepot reported progress on its 2025 vision plan, which includes a blueprint to simplify its organizational structure while focusing on customer service, quality, automation and operating leverage.
The bank reported $6 billion in financing in the second quarter, up from $4.5 billion in the first quarter. In the second quarter of 2024, home purchase loans accounted for 72% of loanDepot’s total transaction volume.
