| When it comes time to do a home equity refinance | | | | credit card. The nice thing about a home equity line of |
| there are several terms that you should be familiar | | | | credit is you only have to make payments on the |
| with. Many people do not understand how a home | | | | money you have borrowed. If you have a $10,000 line |
| equity loan works or even what home equity is. There | | | | of credit and your use $3,000 to do some home |
| are two basic types of loans you can get when it | | | | remodeling you will only make payments on the $3,000. |
| comes to home equity; an equity loan or an equity line | | | | It is important to remember that just like any other loan |
| of credit. | | | | you will be paying interest on any money you use out |
| So what is home equity? Quite simply it is the | | | | of your credit line. |
| difference between what you still owe on your home | | | | When you are looking to do a home equity refinance |
| and its appraised value, or what your home is worth. | | | | loan you must realize that you are using your home as |
| Here's a simple example. If your home is appraised at | | | | the collateral in order to get the loan. You are |
| $150,000 and you still owe $50,000 on your mortgage | | | | guaranteeing your ability to repay the loan against the |
| the equity in your home is $100,000. | | | | value of you home. If for any reason you cannot |
| When you take out an equity loan, or refinance your | | | | make your payments the lender has every legal right |
| current loan, you are borrowing against the value you | | | | to foreclose on your home so they can sell it to cover |
| have built up in your home. This type of loan will give | | | | the value of the loan. |
| you a one time lump sum in the form of a check that | | | | One of the best reasons to do a refinance your |
| you can do whatever you choose with. You will have | | | | current home equity loan is to get a lower interest rate. |
| to pay it with a monthly payment over a set amount | | | | If your original loan had a high interest rate you can |
| of months, much like a mortgage. | | | | save quite a bit of money if you are able to obtain a |
| A home equity line of credit works a little differently. | | | | lower rate. |
| You still are able to borrow a specific amount of | | | | If you are thinking of doing a home equity refinance |
| money based on the value of your home, but the | | | | then do some research and get at least four quotes |
| money is not paid out in a lump sum. You can tap into | | | | from reputable lenders to see which package may |
| your line of credit as needed, much like we do with a | | | | work best for you. |