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Or refinancing my home? What is the difference and which is the best way to go?

2006-12-28 23:54:16 · 4 answers · asked by talang1997 1 in Business & Finance Personal Finance

4 answers

You don't want a home equity loan at all because if you can't make your payments you can lose your house. When the interest rates fell dramatically back in 2000 my husband and I refinanced our home. We cut off 8 years from our mortage and we only had to pay like $20 more a month in mortage. If you refinance it may or may not bring the cost of your monthly payment you have to factor in interest rates now and for how long you want to finance.

2006-12-28 23:58:38 · answer #1 · answered by Pinolera 6 · 0 0

It depends.

Refinancing your home is usually a great idea if you can reduce your interest rate by at least 1%...the problems is that those 'savings' don't really show up for almost 2 years because of the costs incurred while refinancing. My understanding is that you are in somewhat of a money crunch and most likely don't have a large stash of cash sitting around, it doesn't make sense to go into debt to save money.

Home equity loans are great in theory, it just depends on how the money will be used. If it is for improvemetns in the house, it almost ALWAYS makes sense. If it is to pay down credit cards, it only makes sense if you won't recharge up your cards and will instead apply payments towards the home equity loan.

If you've reached the point of wanting to take out a home equity loan, you most likely don't have 3-6 mths living expenses saved up. It should be one of your first goals when you get back on your feet.

If you have no other way of getting your hands on money (credit card cash advances DON'T count) and your house valuse is more than likely to stay stable, then a home equity loan is your best bet...just make sure you pay back the loan when you get back on your feet.

I hope your back feels better!

2006-12-29 00:21:52 · answer #2 · answered by Blicka 4 · 0 0

Okay, I'm not sure how other financial institutions do this but at the one I work for we pay for the fees on the home equity loan so the member doesn't have to, but if they are refinancing then the member does have to pay fees.
I deal with the home equity loans and we have our mortgage rep that deals with home refinances so I can generally tell you what the main difference is.
A home equity loan, you can only borrow so much of the value of your home. For example lets say you have a home valued at $100,000.00 and your lender will allow up to 80% of the value, then you could borrow $80,000.00. If your payoff balance is this amount or less then it would be okay to do a home equity loan, however lets say you owe 90,000.00, then you must do a refinance.
If I'm not mistaken, currently our home equity rates might be lower than a mortgage rate.
Just check through your lender for both different types of rates.

2007-01-01 11:02:15 · answer #3 · answered by Anonymous · 0 0

I recommend refinancing as there are just so many more products available there such as interest only loans, adjustable rate mortgages, 40 year mortgages, 15 year mortgages, mortgages that let you pick the payment, etc.
Our debt settlment company deals with dozens of loan officers and we would be happy to recommend 1 for you.
www.totaldebtsolutionsllc.com

2006-12-30 12:33:34 · answer #4 · answered by Anonymous · 0 0

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