A Closed-End Second (CES) loan is a type of loan that allows homeowners to borrow a lump sum of money against the equity in their home, similar to a traditional mortgage. Your 1st mortgage against your home will remain in effect. This 2nd mortgage allows you to still access your home equity without having to payoff your current loan which may be at an attractive rate.
Unlike a Home Equity Line of Credit (HELOC), which provides a revolving line of credit that borrowers can draw from as needed, a CES loan provides a one-time lump sum payment to the borrower at closing. CES loans have a fixed repayment term, meaning that borrowers must repay the loan over a predetermined period, ranging from 10 to 30 years. During this time, borrowers make regular monthly payments consisting of both principal and interest until the loan is paid off. The fixed rates give you peace of mind that it will remain consistent and the funds from your CES loan can be used for various purposes, including home improvements, paying off high interest debt, major purchases, or other financial needs.
