11 responses to “Is it better to refinance or take out a home equity loan?”

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  jb1220jb March 9th, 2009 at 05:44

  LAMONT

  too late to refinance.

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  Edward F March 10th, 2009 at 03:57

  LELAND

  Depends on how much $$ you need. Usually it is better to do a HELOC (Home equity line of credit) since they have no closing costs. If you need to get a LOT of equity out (more than about %5 of your home’s value) Then you may want to do a “Cash out” refinance and take advantage of the fixed interest.

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  Dwasifar K March 12th, 2009 at 03:02

  DOUGLAS

  You will generally get a better rate from a cash-out refi than from a home equity loan, but the equity loan will be paid off sooner.

  However, if you already have two mortgages, it sounds like you’re overextended and probably should not be taking more equity out of your house.

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  Miguel G March 15th, 2009 at 12:04

  SEYMOUR

  How long will you stay at this home is a factor
  Are you concern about the variable rate and is pressing you to refinance.
  You must be careful when refinancing it may create a bigger problem.

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  Darby March 16th, 2009 at 13:07

  MONTY

  I don’t know what your interest rate is on your first mortgage and it’s common for the home equity line to be variable. Depending on the interest rate, I think you might want to sit tight because the mortgage rates are creeping up. You might want to check on the home equity line to see if you can get different terms. I was at prime plus one/half and now I’m at prime minus one/half. I’m a home owner, not a banker or loan officer. Good luck.

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  Renita M March 17th, 2009 at 00:28

  KIM

  i have been in the mortgage business for almost 9 years, you actually need someone to look into your situation and compare to see which way it would be better for your individual needs. depending upon what your current first mtge interest rate is now and the amount you have borrowed, as to what the new first mortgage rate with the present rates could bring you. just remember that a heloc is more considered a credit card against your home and is not a fixed interest rate. please feel free to contact me at if you would like me to look into the situation for you.

  renita

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  KL March 20th, 2009 at 06:16

  THERON

  It all depends on what your current fixed rate is at…if it’s so low that it’s not worth the closing costs for a full refinance, a lender can refinance your HELOC into a fixed 2nd mortgage for almost no closing costs. Contact a lender and have them compare a full refinance compared to just refinancing the 2nd. The other thing you have to be concerned about is your LTV (loan amount compared to the value of your home.) By combining the two loans into one, if your LTV goes above 80%, you’re looking at paying PMI (private mortgage insurance.)

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  mkostelnik@sbcglobal.net March 21st, 2009 at 12:04

  SHAUN

  HELOCS are variable rates also. Look into a 2nd mortgage with a fixed rate and compare that to a new “cashout” mortgage. Try not to increase the number of years you will be paying or any monthly savings will be lost. The longer you pay the worst off you are.

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  Eric S March 23rd, 2009 at 02:52

  JULIAN

  As another posted said, it probably makes sense to talk to a mortgage professional about your situation, because a lot depends on your answers to a few questions.

  1) What are your current borrowing qualifications? (credit score, amount of equity in the home, mortgage history, ability to prove income, etc.)
  2) What is your current 1st mortgage rate? Is it better than what you could qualify for if you refinanced?
  3) How large are your 1st and 2nd mortgages, respectively?
  4) How long do you expect to stay in your home?
  5) How much would you pay in closing costs to refinance or re-do your 2nd mortgage?
  6) How important is your overall monthly payment vs. the interest rate?

  Here are some pros and cons of each course of action:

  Refinancing 1st mtg and consolidating both current loans:
  – closing costs are higher
  – interest rates are lower
  – easier to qualify
  – easier to get an Interest Only payment with a fixed rate
  – may have larger penalties for early payoff

  Refinancing 2nd mortgage:
  – lower closing costs
  – higher interest rates
  – more difficult to qualify
  – a fixed 2nd will have higher payments than a HELOC in most cases; there are a few lenders that offer fixed rates with Interest Only payments (HELOC payments are always Interest Only)
  – lower penalties for early payoffs

  I could go on and on — you can see that it probably makes sense to find a mortgage professional that you trust, and ask them for advice.

  Good Luck!

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  cafe_blue_note March 23rd, 2009 at 15:45

  STEWART

  It depends. Do you have any other loans:car, credit card balances, etc? If so refinancing would be the answer.
  I am a mortgage concultant for CITINET MORTGAGE,
  contact me by clicking on my profile, send me a contact # ware I can reach you, and let’s see what I can do.

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  frymail2005 March 23rd, 2009 at 16:52

  COURTNEY

  What you need to do is look at down the road and see where your payments and interest rates could end up if you continue with the Home equity line. Within the next two years it is expected that Home equity lines of credit will reach over 10-12%. Just 4 years ago the prime interest rate for a Home Equity line of credit was 4%!! Now you will be lucky to get one at 8%!

  When you dont have much equity and you are stuck in a varying Heloc, you are not going to qualify for the best of rates either. BUT.. you will qualify for a fixed rate by rolling everything together. After comparing the two, and where the Heloc can eventualy be, even with a much higher rate on one large mortgage, it makes more sense. The fact is that the stability of the fixed rate will ensure that you dont get hurt in the future with a rising variable.

  I am a loan officer with Providential Bancorp, a nationwide mortgage lender. Most banks and lendrs will not qualify you for good rates around 100% LTV. But, all lenders are different. We specialize in working with people in similar situations to yours. Whether it is Bad credit, HIGH LTV loans due to no equity, bankruptcy’s in the past, etc.) Give me a call at 312-264-6448, my name is Jason. I’d be happy to assist you in a refinance, or at least be able TO LET YOU KNOW EXACTLY WHAT YOU QUALIFY FOR. Youy can then make a more informed, and educated decision whether it would be the right move for you.

  You can email me at.

  I will be back to my office on Wednesday the 5th, but i will be on my email account through tthe weekend if you would like to talk now!

  Either way i hope you enjoy your holiday weekend!

  Jason Fry