Home Equity Loans

If you own a home and are looking to consolidate debt, home equity loans may be a solution. In the right situation, refinancing with a home equity mortgage can be a very good option. (What is home equity?)

How Do You Know If Refinancing Home Loans Are A Good Option For You?

Refinancing only works if the interest rates are low and you can lengthen the term of your mortgage loan. If interest rates are high and/or you can't lengthen the term of your loan, then refinancing probably makes no sense.

The goal of home equity loans is to help you pay off your debt. You borrow money against the equity you have built in your home and use that money to pay off other debts that carry higher interest rates, such as credit card debt. With refinancing home loans, the cost of your monthly debt payment should be less than it was before because your interest rate charges are lower.

Because interest rates fluctuate, refinancing with home equity mortgages may not always be the right choice.

How Do You Measure Costs And Gains From Refinancing With Home Equity Loans?

First, summarize all the costs of your current loan/mortgage along with your current other debts, including credit card debts. Determine what your total payments are per month.

Then get information from lenders about equity loans that you may qualify for, or use our handy home equity loan calculator to estimate what the lender might approve.

Now compare those details with your current monthly payment amount. Since the loan period may vary according to how determined you are to pay off your debt, make the best guess as to how long you will have this new mortgage. If the total costs are lower with the new home equity mortgage, then you should refinance.

How to Avoid Mistakes in Refinancing With Home Equity Loans


Refinancing with home equity loans can certainly lift and release the pressure of overwhelming and mounting debt. However, many people have the misconception that refinancing won’t cost them money.

For home owners with second mortgages, people with an extremely heavy debt load or those having trouble paying their bills on time, equity refinancing may not be the answer. You may end up paying more than if you stick to the loans and payment schedules you already have.

Just for the record: Refinancing home loans will cost you money just like any other loan. What makes it a good option for some is the fact that it can cost you less compared to most other loans.

Always, always shop and compare lenders! Ask for their loan consolidation information and make sure you get all the details you need regarding their terms and fees!

checkmark bullet  For more details on how home equity loans work to refinance your home, go here.

checkmark bullet  For information regarding best mortgage deals go here.

checkmark bullet  You can consolidate your debt & lower your monthly payments!

checkmark bullet  See the tips for selecting the best fixed rate mortgage here.

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