Refinancing with Home Equity Loans

If you've lived in your home for a reasonable amount of time, you might be considering refinancing.

Refinancing offers several options, and one popular choice recently has been the home equity loan.

A home equity loan allows you to pay off your existing mortgage at a lower rate. Additionally, it provides the option to access some of the equity you’ve built in your home through monthly mortgage payments and property appreciation.

For example, if you owe $125,000 on your mortgage and your home is worth $200,000, you have $75,000 in equity. With a home equity loan, you could borrow $150,000, pay off your current mortgage, and have $25,000 left for purposes such as home improvements, purchasing a new car, or paying for college tuition.

Home equity loans are also available in the form of a home equity line of credit (HELOC). Unlike a standard home equity loan, a HELOC typically features a variable interest rate that adjusts with the prime rate, so it’s important to consider this when deciding.

A HELOC offers the flexibility to borrow against the line of credit as needed, and it can be re-tapped once it has been partially or fully repaid, adding to its convenience.

Before choosing a refinancing option, make sure to thoroughly educate yourself about the mortgage industry. Shop around for the best rates and programs that fit your needs and budget. The mortgage industry is highly competitive, so leverage this to your advantage and let lenders compete for your business. Good luck!