Home Equity Refinancing
June 8, 2011 | 
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Home Equity Refinancing
In today’s fickle financial market having a low, fixed interest rate home loan is a good thing. However, if the need arises to consider some home renovations, buy a second summer cabin in the mountains, or rid yourself of some pesky credit card debt, this is a good time to make your move. Before you jump in the home equity refinancing pool best you understand the difference between two loan programs your lender will most likely offer. Home equity refinancing versus home equity line of credit.
Most lenders, including the company with your first mortgage, will offer what’s in their best interest on a home equity refinancing. Since your lender will want to keep your business there will be options available like no application fee, no bank fees, a competitive interest rate if you’re FICO score is on the north side of 700, no appraisal fee, and potential tax advantages. Sounds good so far, huh!
Your home equity refinancing loan will be similar to a second mortgage. Lenders like this deal because it’s safe. If by chance you default the lender has a 50 percent chance to recoup losses because your home is the collateral. You will also put the mortgage payments on the top of the debt pile, and pay them first to keep a roof over your head. The home equity refinancing loan is easier to qualify for, payments may be tax deductible, you can get a larger loan amount, and the interest rate should be lower.
There are some pitfalls of receiving a home equity refinancing loan. As mentioned above, if you don’t make the payments, you could lose your home. Also, beware of scammers pretending to be a lender using nefarious methods to get you to sign paperwork where you could lose your home. So shop around to at least three lending sources. Compare. Be diligent.
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