How to Use a HELOC to Pay Off the Mortgage

If the circumstances are right, you can use your home equity line of credit, or HELOC, to pay off your mortgage. For it to work, you need a good amount of availability on the line and a good interest rate; most likely, you will already have to have paid down the mortgage significantly. If you've weighed your options, don't hesitate to pull the trigger on the deal if you feel it's the right move.

Contact your mortgage company and submit a written request for a payoff balance. Include your name, account number, and contact information. Be sure to let the lender know the date for which you want to know the payoff balance.

Review your payoff figure and make sure that you have enough availability on your HELOC to support the payoff. If you don't, contact your lender and request an increase in your HELOC. If that's necessary, you will fill out an application and submit proof of income to show you can support the increase. If your HELOC is more than about six months to a year old, you will have to get a new appraisal as well.

Access the funds from your HELOC. Depending on your lender's methods, you will write a check, request a deposit or make an online transfer. Once you've completed the advance, make sure that it went into the proper checking account.

Write a check payable to your mortgage company and submit it along with a copy of the letter you received, advising you of your payoff balance. If possible, bring the check and payoff letter to the lender in person. If not, send certified mail so you have a record that it was received.

Follow up with your lender to ensure that the loan has been closed and that it will follow through in cancelling your mortgage. Once verified, you will only have to make payments on your HELOC.