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Refinancing Your Mortgage Or A Home Equity Loan - Which Is Better?
By Joseph Kenny
When it comes time to get the money you need to renovate your home, you have some choices to make concerning the financing of it. Both ways, either refinancing your first mortgage, or a home equity loan, will give you access to your equity. After that, though, a number of differences will clearly stand out. Here is what you need to know about these differences so you can intelligently choose the best one for your needs.
Features Of Refinancing Your First Mortgage
By getting a cash out mortgage, you can replace your first mortgage and obtain your equity. This means that you will have to pay the fees again that you paid when you bought the house in the first place. However, if you wait until the interest rates are down, you can get a better deal than you had before. The amount that you can gain could easily offset the costs of refinancing and save you thousands of dollars over the life of the new mortgage.
The interest rate for a first mortgage is always lower than what you would get for a second mortgage - which makes this the ideal choice. You also will have only one payment each month, which you could even make lower than what you have now by extending the time length on the mortgage. If you already have more than one mortgage, then this is also a good way to consolidate them and get your equity at the same time, as well as reduce your monthly payment.
If you currently have an adjustable rate mortgage that is about to run out of the fixed rate portion, then this should be the way you would want to go. Not only will it give you level payments with a fixed interest rate, assuming you get a fixed rate mortgage, but also your equity for the upcoming renovation project you have in mind. This means you could take care of more than one problem at once.
Features Of A Home Equity Loan
A home equity loan is considered a second mortgage. This means it will give you an additional payment each month. If you can afford the extra payment, this may be the way you want to go. It will also have a higher rate of interest than a first mortgage, and usually has a time frame of up to 15 years for repayment.
You can take out your equity but need to leave enough in there that is equal to 20% of the value of the house. This is true with any kind of mortgage, since you may need to pay private mortgage insurance if you go over this amount.
A home equity loan is mostly fixed rate, but some may also be adjustable. Your loan payments are fully amortizing, and money used for fixing up your home is often tax deductible. This type of loan is seeing some new variations come out recently, so you will want to see what is out there before you choose.
The Choice Is Yours
Obviously, only one of these choices will best meet your needs. After you choose a course to take, you will then want to get a few quotes - whether you choose to refinance, or get a home equity loan. You will need to look them over carefully and consider all aspects in order to find the one that is best for you.
Joe Kenny writes for Rebuild.org, offering home refinance, and also if you are looking for a new home loans
Visit today: Loans with Rebuild.org
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Refinancing Your Home Mortgage Loan With Bad Credit News
Risking the Country's Credit for Homeowners - Seeking Alpha
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Secrets to saving your home - Tri State Defender
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When couples split, the home is a hot potato Belleville News Democrat, USA - In the past, the spouse keeping the home would refinance the loan under his or her name. But if your home is worth less than your mortgage balance, ... |
FDIC: Government idea won't help people in need - MarketWatch
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The Feldman Law Center, a Loan Modification Attorney - PRLog.Org (press release)
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Reverse mortgages a lifeline for seniors - San Diego Union Tribune
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Refinancing Mortgage Loan, Countrywide Home Loan & Equity Loan Rates ScienceBlog.com, CA - From new Construction Loans to Countrywide Home Loans, Mortgage Loan Refinance and Refinancing Mortgage Rate. Whether you have great credit, marginal or bad ... |
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Avoiding your own mortgage collapse The News Journal, DE - It's not always bad news. Indeed, several large mortgage lenders have developed programs to help borrowers with distressed loans. ... |
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Money Watch Report KEYC, MN - The lower interest rates would be available only to borrowers who are buying a home, not those refinancing a mortgage.The recession is forcing many ... |
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Achieving the Seven Essential Goals of a Housing Fix RGE Monitor, NY - A much-lower rate wouldn’t really be a subsidy since the loan would be fully collateralized and Treasury yields have plunged.) Refinancing a big portion of ... |