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Home Equity Loan versus
Refinancing
Your
Mortgage |
In order to determine whether or not you should refinance
your home or take out a home
equity loan, you first have to decide
why you’re applying for a loan in
the first place.
If you are looking
at your current mortgage and finding that you may be
able to get lower interest rates and lower your monthly
payments, then refinancing may be your best
option.
Home equity loans,
however, can be used for a variety of reasons –
including consolidation of your other debt like credit
cards, which tend to have much higher interest
rates.
When you
refinance, you’re taking out a loan that will probably
be extended for 30 years. So you wouldn’t want to
put you credit card debt into a refinanced mortgage
because you’re stretching that debt out instead of
saving money.
Sometimes, you’ll
want to use a home equity loan to refinance your
mortgage. If your current mortgage is 10.5% on a
fixed-rate mortgage note, you could get a better deal
using a home equity loan with a lower interest rate and
maybe even have cash left over for other
uses!
With a home equity
loan, you’re putting the value of your home to work for
you. Most people don’t realize that these types of
loans can be used for refinancing their mortgage – not
just on vacations, remodeling, or college
tuition.
Home equity loans
don’t have closing costs, can lower your interest rate
and monthly payments, and don’t require private mortgage
insurance unless you borrow more than 80% of your home’s
value. Plus, you can deduct the interest paid on
your loan in some cases!
© 2004 - All Rights Reserved. Apex Personal Loans
Store does not assume any responsibility for the
accuracy or completeness of the above article. Please
consult a financial advisor for specific advice
pertaining to your particular situation.
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