Refinancing Home Equity Loans
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Refinancing Home Equity Loans
You might think that the only type of home loan you can refinance is a regular mortgage, but in reality, any home loan can be refinanced. You can even refinance home equity loans.
In order to make the commitment to refinancing your home equity loan, research current home equity rates in order to find a new rate that makes the refinance worthwhile. Whether you have a home equity loan or line of credit, you can find more favorable rates if interest rates in general trend downward.
If you do decide to refinance your home equity loan or line of credit, here are a couple of tips to help give you an advantage:
- Make sure you only commit to a refinance rate that is fixed lower than your original rate. If you agree to an adjustable rate, you could end up paying more in interest than your original home equity loan would have allowed for.
- Make sure there are no prepayment penalties. Without penalties, you can pay off your loan early without the risk of punishment.
- Agree to automated monthly payments in an amount that's more than you need to pay. If you pay down your principal with small, additional payments every month, you could shave years off your loan term and save thousands in interest.
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