You can save money by refinancing your home equity loan and getting a lower rate or lower payments. Use your second mortgage as part of your overall financial plan to get the most out of your home equity. This could mean paying off debt, fixing up the house, or saving money for college.
Using a home equity loan to its fullest
Home equity loans have low interest rates, which are lower than almost any other kind of credit. Your equity in your home is also an investment, and ideally, its value should go up over time.
Make sure you get the most out of the deal when you borrow against the value of your home. It makes financial sense to trade credit card debt with high interest rates for a second mortgage with low interest rates. So does making repairs and improvements to your home that raise its value.
Make sure to take advantage of any tax breaks that come with your home equity loan. Most of the time, you can deduct paid interest from your tax return to the IRS.
Refinancing to save more money
By refinancing your home equity loan, you can get a lower rate, which will save you even more money. Most home equity loans have rates that can go up, because they are variable. By refinancing your loan, you can lock in lower rates, choose better terms, and pay less each year in fees.
You can also lower your payments and interest rates by choosing a shorter loan term. You can also save a lot of money by paying your loan every two weeks.
You could also use a refi to combine your first and second mortgages into one loan. You save money on both the application fees and the interest rates when you combine the two loans into one.
How to Look for Refinancing
Take the time to compare loan offers before you refinance to get the best deal. Quotes for loans can be found online and won't hurt your credit score. By giving lenders some basic information, you can get numbers that you can use to decide whether or not to refinance.
Check out the different loan terms that are out there. Compare, for instance, how much you'll save if you refinance both of your home loans versus just your home equity loan. You can also change how long it takes to pay and how much it costs. With this extra information, you can be sure you're using your home's value to its fullest.
