Can You Apply for a HELOC After Refinancing Your Mortgage? A Complete Guide

If you’ve recently refinanced your mortgage and need extra money, you might wonder whether you can still apply for a home equity line of credit (HELOC).

Yes, you can apply for a HELOC after refinancing, often immediately—but some HELOC lenders, including Figure, which our team has selected as the best HELOC lender, advise that waiting at least a month may improve your chances of getting better terms. In this guide, we’ll explain how refinancing affects your HELOC eligibility, when it makes sense to apply, and how to get started.

Table of Contents

1. Can you have a mortgage and a HELOC at the same time?
2. How does a mortgage refinance affect HELOC eligibility?
3. How soon after refinancing can you get a HELOC?
4. When does it make sense to get a HELOC after a refinance?
5. How to apply for a HELOC
6. Cash-out refinance vs. Refinance and HELOC
7. Do you need approval from your refinance lender to take out a HELOC?

Can you have a mortgage and a HELOC at the same time?

Yes, you can have a mortgage and a HELOC simultaneously. To qualify for a HELOC, lenders will evaluate your credit score, income, and home equity. Most lenders require at least 15% equity, meaning if your home is worth $300,000, your loan balance should not exceed $255,000.

While managing two loans can strain your budget, planning for unexpected financial changes—such as job loss or reduced income—can help ensure you stay on track with payments.

How does a mortgage refinance affect your eligibility for a HELOC?

Refinancing your mortgage can affect your eligibility for a HELOC in positive and negative ways:

• Negative: A refinance may lower your credit score by a few points due to a hard inquiry, and rolling costs into your loan can increase your loan-to-value ratio (LTV). Higher monthly payments may also raise your debt-to-income ratio (DTI), making it harder to qualify.

• Positive: Refinancing to lower your monthly payment or build more equity can improve your DTI and boost your borrowing power. Making on-time payments after refinancing can also enhance your credit score.

How soon after refinancing can you get a HELOC?

You can apply for a HELOC anytime after a refinance. But some lenders, including Figure, recommend waiting 30 to 45 days after your refinance is recorded before applying for a HELOC. This allows your credit score and LTV to stabilize, improving your chances of approval and better terms.

We recommend waiting 30-45 days after your refinance documents have been successfully recorded with your county before applying for additional financing with Figure. This is to ensure your liens are correctly reporting on both your credit profile, as well as our property data vendors which we use to calculate various details of your qualified offers.

Figure (LendEDU’s highest-rated HELOC lender)

Additionally, waiting a couple of months may be wise in these situations:

• Credit inquiries: Hard inquiries from your refinance stay on your credit report for up to two years. Check your report to see how these inquiries may have affected your score.
• Higher payments: If refinancing increased your monthly payment, it could raise your DTI. Lower your DTI by increasing your income or paying off debt.
• Increased LTV: If your LTV rose after refinancing—due to rolled closing costs or a lower home appraisal—you may need to rebuild equity before qualifying for a HELOC.

How to calculate your LTV

LTV = Mortgage balance / Home’s appraised value

Divide your mortgage balance by your home’s appraised value. For example, if you owe $200,000 and your home is worth $250,000, your LTV is 80%. Most lenders prefer an LTV of 85% or less.

When does it make sense to get a HELOC after a refinance?

Refinancing and applying for a HELOC can add hard inquiries to your credit report. But the benefits of a HELOC may outweigh this drawback in these situations:

• You need to finance home repairs. If you need to fix a leaky roof or replace a broken furnace, a HELOC can give you the money you need to get the job done fast. It can allow you to complete a project without draining your emergency savings. (See the best HELOCs for home repairs.)
• You want to consolidate high-interest debt. If you have credit card debt or high-interest loans, rolling them all into one HELOC payment can help you lower your interest rate. (View the best HELOCs for debt consolidation.)
• You must cover a large expense. There may be times when you encounter a large expense that you don’t have savings for. A HELOC can provide the funds you need to cover the expense without having to wait. (Check out the best HELOC lenders our team rated.)

Write down the pros and cons of applying for a HELOC side by side—on an actual piece of paper! Assess the monetary value of the pros and cons to determine whether the benefits outweigh the drawbacks.

In some situations, the cons may outweigh the pros, but you still decide to apply for the HELOC. For example, if you need to cover a large expense and don’t have an emergency fund established or other reserve to draw from.

To decide whether it is the best choice for you, do your own research, then consult with a trusted friend or family member, financial counselor, or other financial professional to make the best decision.

How to apply for a HELOC after refinancing

Follow these steps to apply for a home equity line of credit after refinancing:

1. Check your credit score: Use free tools from your credit card provider or a credit bureau to see where you stand.
2. Prequalify: Many lenders offer soft credit checks to estimate your potential terms and rates.
3. Consult your lender: Ask your refinance lender whether it offers discounts for repeat customers.
4. Compare rates: Shop for the best rates from at least three lenders, paying attention to fees and penalties in the fine print.
5. Prepare your documents: Gather essentials including your Social Security number, proof of income (e.g., pay stubs, tax returns), and address history.
6. Submit your application: Once you choose a lender, submit your application and wait for approval.

Cash-out refinance vs. Refinance and HELOC

If you haven’t refinanced yet, you might consider a cash-out refinance instead of combining a traditional refinance with a HELOC.

A cash-out refinance allows you to refinance your mortgage for more than you owe and get the difference as a lump sum. This option simplifies financing into one loan with fixed terms, while a HELOC offers flexibility but involves two separate loans.

	Cash-out refinance	Refinance + HELOC
Interest rate	Fixed or variable	Refi: Fixed; HELOC: Variable
Loan term	30 years	Refi: Same as current loan term; HELOC: 10-year draw period; 10-20-year repayment period
Upfront costs	Closing costs	Closing costs + HELOC fees
Monthly payment	One payment	Two payments (mortgage + HELOC)
Flexibility	Less flexible	More flexible
Access to equity	Immediate access to all equity	Access to a line of credit, so you can draw from equity as needed

• A cash-out refinance is best if you need a large lump sum upfront and want fixed monthly payments.
• A HELOC is better for ongoing expenses where flexibility is key.

If you need a large lump sum immediately, a cash-out refinance would be best. If you need money but don’t know the amount yet, a HELOC might be better. If you want one payment and not two, I would go with the cash-out refinance.

It’s important to note that the cash-out refinance restarts the loan term, which could be desirable to some but not to others.

Also consider something that may not incur fees, such as borrowing from a trusted friend or family member, or establish a savings plan to reach the goal you’re looking to accomplish. If it is an emergency, I suggest a personal loan first. As a last resort, consider a credit card.

Read More

Best Cash-Out Refinance Companies

Do you need approval from your refinance lender to take out a HELOC?

You shouldn’t need approval from your refinance lender to take out a HELOC, and it shouldn’t affect your mortgage terms unless you take out the HELOC before you refinance. 

In general, the first lien on your property has the highest priority, followed by subsequent liens in the order in which they were recorded. 

So if your first lien is your refinanced mortgage, the HELOC will have a lower priority and shouldn’t affect your refinance terms. But if the HELOC is listed first, it can influence your future ability to refinance.