Refinance Your Home Equity Mortgage Loan

Home equity loans are perfect for homeowners who need money for home repairs, paying off credit cards, or paying for a child's education. Home equity loans allow homeowners to borrow money using their home's equity as security or collateral. These loans are different from refinancing a home. Refinances create a new mortgage, and homeowners are subjected to high closing costs and other fees.

Benefits of Home Equity Loans

Home equity loans are an attractive alternative because the process is much quicker than refinancing. On average, homeowners receive funds within a week. Furthermore, fees are minimal. Those who refinance their home to receive cash-out at closing can expect to pay thousands of dollars in closing costs. On the other hand, refinancing is a great option for individuals who purchased their homes when interest rates were high.

How Does a Home Equity Loan Work?

When a person acquires a home equity loan, the money borrowed is based on their home's equity. Equity is the difference between a home's worth and the amount owed to the lender. For example, $35,000 owed on a property valued at $60,000 has an equity of $25,000. Thus, the owner of this property may obtain a loan for up to $25,000. The money borrowed can be used to start a business or pay the balance on credit cards and student loans. Of course, home equity loans must be repaid. Therefore, borrowers should be able to handle an additional monthly payment. Defaulting on a first or second mortgage has serious consequences.

Refinancing Home Equity Loans

Unfortunately, home equity loans carry a higher interest rate. In some cases, homeowners may also receive an adjustable rate. Adjustable rates are risky because the interest rate may rise throughout the duration of the loan. Individuals in this situation may consider refinancing their home equity loan. Refinancing a home equity loan creates a new mortgage which combines the original loan amount and the second mortgage. Thus, instead of making two monthly payments for a $35,000 first mortgage and a $25,000 second mortgage, homeowners will make a single monthly payment for a new mortgage of $60,000.

To view our list of recommended home equity loan companies, visit this page: Recommended Home Equity Lenders Online.

Carrie Reeder is the owner of ABC Loan Guide, an informational website about various types of loans.

Home Equity Loan or Cash Out Mortgage
You might need more cash out of your property, you may be unsure which way is the best way forward, a cash out mortgage or a home equity loan. There a...

3 Things to Watch Out For With a Cash Out Refinance Mortgage Loan
A cash out refinance mortgage loan is a great option if you have accrued a lot of equity in your home. If you owe $75,000 on a home that is worth $12...

Cash Out Refinance Mortgage Loan - Resort For Greater Cash Help
Your home value has substantially gone up over the years. This means that your home has great amounts accumulated in it as equity. It is this equity t...

How A First Mortgage Differs From A Home Equity Loan
A first mortgage and a home equity loan are two different types of loans. A first mortgage is taken out then the home is initially purchased. A home e...

How to Refinance Your Mortgage Loan After Chapter 7 or Chapter 13 Bankruptcy
Did you recently file for Chapter 7 or Chapter 13 bankruptcy and need a mortgage refinance loan?There is no question that filing for bankrupcty negati...

2nd Mortgage Loan: Affordable Home Equity Loan When Refinancing May Not be Best Mortgage Option
If you are a homeowner in need of cash and refinancing is not a possibility, using a second mortgage to access equity in your home can save you money....

Second Mortgage or Equity Loan: They Are Both the Same
In the financial arena, many terms are used to explain what amounts to be the same thing. Mortgages are home loans and equity is the cash value in you...

Refinancing Your Second Mortgage Or Home Equity Loan With Bad Credit
When you see that interest rates are dropping, you may find that by refinancing your home equity loan you will be able to save money. This is especia...

Mortgage Loan: Home Equity Basics
If you are a homeowner in need of cash for any reason, you might consider borrowing against equity in your home. Equity in your home is an excellent ...

125 Percent Mortgage Loans: Refinancing with a 125 Percent Mortgage Loan
There are a variety of ways to borrow against the equity in your home. Refinancing your current mortgage and taking cash back could save you money ov...

Debt Consolidation Tips: Maximizing the Equity in Your Home with a Second Mortgage Loans
Are you moving within the next 3 years? If not refinance your debt that has compounding interest rates. Refinancing your existing home loan with a cas...

Home Equity and 2nd Mortgage Loan Basics
Using the Internet to find lenders is a fast and easy way to compare home equity loans. You no longer have to visit your bank and sit in front of a l...

Home Mortgage Loan - Things You Need to Know
Home Mortgage loan can be an important event in your life. It will help define your credit history from that point on. Moreover, a home mortgage loa...

Mortgage Refinance Loan With Bad Credit - How A Low FICO Credit Score Affects You
The Fair Isaacs Corporation (FICO) pioneered a system of scoring your financial health, known as your FICO score. Your FICO score is a number ranging...

No Equity Loans - Refinancing Your Mortgage With No Equity
No Equity Home Loans or No Equity HELOCs are second mortgage loans that are offered to consumers, who have no equity in their homes. Having no equity...