First-Lien Home Equity Line of Credit (HELOC)

Best for those who want a fixed home loan and who don't have a mortgage with another lender.

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How to know if you qualify for a HELOC in 1st lien position

You can qualify for a home equity loan or HELOC in 1st lien position in one of two ways:

  • You’ve paid off your mortgage and own your home outright, with no other outstanding home loan debt, or
  • You use a portion of your HELOC or home equity loan to pay off your mortgage in full.

To earn approval for a first lien position HELOC or home equity loan, lenders will also consider your available home equity, income, credit score, and other elements of your financial health.

A Bethpage HELOC with a 1st position lien can also feature no fees, $0 in closing costs on loans up to $250,000[1], a maximum borrowing limit of $1 million, and debt protection coverage.

Why lien positions matter for home equity loans and HELOCs

If you default on your mortgage payments for any reason, such as a severe illness or loss of employment, your home can go into foreclosure.

The first lien position signifies the ranking of the debt if you default on your loan. The lender that holds the first position will be the first in line to collect what is owed to them from the sale of the foreclosed property.

Second lien holders are at a higher risk because, as the lenders second in line, they will only receive what's remaining after the lender in the first position recoups their debt. Given this additional risk, a second lien position lender will charge its borrowers higher interest rates and fewer repayment term options.

When you can secure a HELOC in first lien position, you will likely find lower interest rates and more borrowing power than a similar HELOC in second lien position behind a mortgage.

Comparing first and second lien positions for HELOCs

Very generally, if you compare a HELOC in 1st lien position with a similar HELOC in 2nd lien position, you can expect a lender to assign higher rates to the HELOC in 2nd lien position.

The higher rate for a 2nd lien position HELOC is to minimize the risk of default for the lender, as a 2nd lien position means that the value of the loan can be recouped from a foreclosure only after the loan in 1st position is paid back.

Whether you qualify for a 1st lien position HELOC or a 2nd lien position HELOC, Bethpage offers no closing costs on lines of credit up to $250,0001, with borrowing limits up to $1 million.

Ultimately, whatever the lien position of your HELOC is, Bethpage will offer a competitive interest rate, based on the amount of your borrowing limit, your ability to repay, and your credit and financial health. While lien position can be a consideration, it won’t impact your ability to earn HELOC approval.

Benefits of using a HELOC in 1st lien position

The main benefit for a 1st lien position HELOC is for the lender: with a loan in first position, they have a higher likelihood of recouping the full value of the loan, even in the case of a default. When loans secured by a home asset are made, defaults on the loan allow lenders to cover the value of their loan through a foreclosure of the home. Lenders in 1st lien position are first in line to receive the profits from that foreclosure sale, before lenders in 2nd lien position receive any foreclosure funds.

However, if you have paid off your mortgage (or are close to doing so), you may benefit from high borrowing limits with a HELOC (given your available equity), and your 1st lien HELOC can help keep interest rates competitive and allow you to select the repayment terms that align with your budget.

[1] Closing costs for the first $500,000 will be paid by Bethpage Federal Credit Union (Bethpage), but must be repaid by the borrower(s) if the HELOC is closed within first 36 months of account opening. Loan amounts over $500,000 may be available on a case-by-case basis to qualified applicants, are not eligible for the discounted introductory rate at any time, and the borrower(s) will be responsible for mortgage tax and title insurance costs on the loan value portion over $500,000.