Refinancing a Home Equity Loan
interest rates have significantly come down since you got your home
equity loan, refinancing your home equity loan can save you money
through lower monthly payments. To save money by refinancing, your
savings in lower monthly payments will need to recover the refinancing
closing costs and fees. Other advantages of refinancing a home equity
loan include switching from a variable interest rate to a fixed
rate, freeing yourself of a balloon payment and changing the term
or length of a home equity loan.
When you consider refinancing a home equity loan, you should also
consider if it makes sense to refinance your first mortgage at that
time as well. If the current interest rate is significantly lower
than your first mortgage rate, it may make sense to also refinance
your first mortgage at the same time.
If you decide to refinance a home equity loan for a longer term
than your first home equity loan, have your lender show you exactly
how this will effect the interest paid.