Should you refinance or take an equity loan
Should you refinance or take an equity loan?
For a homeowner who is fortunate enough to have equity in their home, there may come a time when they consider a cash-out refinance. Others may consider a
Your current interest rate
If you are one of the millions of homeowners who were fortunate enough to finance your home at a very low interest rate, it may be more beneficial to accept an equity line than a new mortgage. If you can keep the same rate you currently have then it may be worth the money, but otherwise, closing costs could make a refinance nearly useless.
Your current mortgage term
When a homeowner has paid off more than one-half of the original term of their loan, it is probably a good idea to opt for an equity loan. If you have paid off 15 years of a 30 year mortgage, unless you can afford the higher payments on a 15 year loan, an equity loan may be more practical. It is important to pay attention to rates on equity loans however, since most of them are adjustable. Review the terms of any future adjustments as well as caps on increases before making a decision.
How much you need and how soon
One of the benefits of a home equity loan is you need not borrow the funds all at one time. For example, if you have an equity line of $60,000 and you only use $2,000, you are only making payments on the $2,000 you have used. With a cash-out refinance, you are paying interest on 100 percent of what you borrow. If you simply want the funds for a cushion, an equity loan is clearly the best option.
If you are uncertain which option is best for you, contact Core Mortgage Financial. We’ll help you evaluate your current mortgage, review your cash needs and compare interest rates to help you find the best option for your individual needs. Many homeowners can take advantage of the benefits of a home equity loan while others may be better off with a cash-out refinance.
Our seasoned mortgage professionals will guide you through the loan process and assist you with making the best decision for your current financial situation. Call us today at 855-554-2673 or apply online and we will call you promptly.