Can you refinance a home equity loan?

Refinancing a home equity loan is definitely possible and certainly something you should consider if interest rates happen to fall at some future point. You can also undergo refinancing if you wish to get more cash money from your home equity, or you can reduce the loan period so that you can accumulate equity at a faster rate.

Whether or not you actually should refinance has a lot to do with specific circumstances, both of your loan in particular and the state of the market in general. Obviously, you might want to wait if interest rates rise, but you should also take care to learn, in advance, just what the overall benefit is to you. For example, you may end up saving money in the long run but only by trading higher rates in the short term. It is also important to remember that refinancing often comes with a series of fees, closing costs and other potential expenses, so you will need to be prepared for immediate costs, as well as analyzing whether or not it pays off to do so.

You should also understand what your current situation is, regarding your mortgage. Since the process of applying for equity loan refinancing is similar to the process of getting one in the first place, you'll need to make sure that your fiscal situation is as sound as can be. Being up to date on your mortgage payments is a virtual must, as is having a stable employment situation and a decent credit score. If you have a home equity loan and you are considering a refinance, you will want to take into consideration the appraised value of your home. If the housing market is in a slump, or anything else conspires to lower your property value, you may find yourself owing more on your house than it is worth, and it can leave you in a situation where you may not be able to sell your home or refinance your primary mortgage.

There are many reasons that people get home equity loans. Home equity loans can be used for home improvements, debt consolidation, college tuition, a child’s wedding, or for other purposes. However, after a while a homeowner might want to refinance to better terms. The good news is that, in most cases, it’s possible to refinance a home equity loan – as long as you have the required equity in your home.

If the amount owed on all your home loans and lines of credit is more than your home is worth, you probably won’t be able to refinance a home equity loan. Most lenders prefer that you have a loan-to-value ratio of 80% or less in order to refinance. While there are programs which can help you avoid that requirement for your first mortgage, refinancing a home equity loan when you have little equity in your home is difficult.

If you are looking to refinance a home equity loan, consider the following good reasons to do so:

·Pay a lower interest rate: If you are unhappy with your current interest rate, consider refinancing your home equity loan so that you have a lower rate. The potential savings for a lower interest rate run in the hundreds of dollars.

·Lock in a fixed rate: Many home equity loans and lines of credit come with variable rates. If you are concerned that interest rates will rise soon, lock in a lower fixed rate now to keep your payments predictable.

·Reduce your loan term: A home equity loan often has a 30-year term. If you want to build equity faster, a shorter-term loan can help. Refinance your 30-year home equity loan to a 20-year or 15-year term, and you could see overall savings while boosting the ownership you have in your home.

Remember, though, that there are some risks associated with home equity loans. If you are required to pay fees, it will take longer to see the benefits of refinancing. A lower monthly payment looks attractive, but you might not actually save any money in the long term if the terms of the loan aren’t favorable to you. Make sure you carefully consider these expenses before refinancing your home equity loan.