Oftentimes, homeowners refinance to combine their first and second mortgages into one loan. With the low interest rates that many people enjoy on their first mortgages, however, this may not be the best option. Consider refinancing just your second mortgage. It may be the smartest choice.
Why refinance a home equity loan?
Refinancing your home equity loan can be a very sensible financial move. If you have a low rate on your first mortgage, there is little sense in increasing that rate during a refinance just to impact your home equity loan. Instead, it is better to renegotiate just the second mortgage. This will usually accomplish whatever goal you have – lower interest rate, cash out or a combination of the two. In addition, the cost of refinancing the home equity loan is negligible or non-existent. Compared to the 2%-4% that is standard for first mortgage refinances, home equity refinances usually do not cost more than a few hundred dollars if anything at all. Many companies will cover the closing costs as long as the loan remains in place for a certain period of time
How do I find the right loan?
The best place to start is with the company that already holds the note. This is often the avenue that offers the easiest transaction. If you have a good payment history, it is common for the company to renegotiate the terms of the loan with no documentation and minimal costs. Before you decide to stay with your current company, however, it is always a good idea to shop around a bit to insure that you are getting the best deal. You may find a bank or mortgage company who is offering special home equity rates or incentives. You can use this information to negotiate with your current landholder. Most companies will match another company’s offer.
Author: C.L. Haehl
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