How to fix your HELOC Second Mortgage Rate

Federal Reserve officials signaled that they could pick up the pace of interest-rate increases this year and next to keep a rapidly expanding economy on an even keel.

Many folks have a variable interest rate second mortgage behind their first mortgage. Often these are obtained to make home improvements, consolidate debs or to obtain a low interest line of credit like charge card.

I’ve gotten several requests lately to lock these rates in to a fixed rate since we are now in a raising rate environment. These are very popular because you do not have to touch your current first mortgage; you don’t want to mess with a low interest fixed first mortgage.

Here is how that works:

You can refinance a variable rate into a second mortgage and have the rate fixed for 3 to 5 years. After that there are caps on the amount of increase each year. Even if you think you may pay off the loan within the 5 years, this would provide stability and also an amortization plan to reduce the amount of the debt. For example you can choose to have the repayment set up for 10, 15 or 20 years while fixing the initial interest rate for 3 to 5 years.

You will no longer be able to draw on it like your line of credit however, you will be reducing the indebtedness whereas most HELOCs (home equity line of credit) only require the interest to be paid up each month and there often is no principal reduction.


The initial fixed interest rate is determined on a variety of factors:

  • Amount of loan
  • Credit score
  • Length of term

Dorothy Mathis of Lincoln savings bank is a leading provider of mortgages in Ankeny, Des Moines,  Bondurant, as well as the whole state of Iowa. For more information please contact Dorothy Mathis at Lincoln Savings Bank 515-327-9938  or