| If you are considering tapping into your home's equity | | | | The money you save upfront generally compensates |
| to consolidate bills, save money, or do home | | | | for the long term costs associated with the higher |
| improvements, there are primarily two options to think | | | | rates that these loans have. |
| about: a full refinance or a home equity loan. While | | | | HOME EQUITY LOANS ARE FLEXIBLE, BUT RISKY |
| each option can benefit you, here are some things to | | | | Most home equity loans, especially home equity lines of |
| debate so that you can make the best decision: | | | | credit (HELOCs), feature adjustable rates tied to the |
| DO YOU HAVE A REALLY LOW FIRST | | | | prime rate. While they offer you the flexibility of taking |
| MORTGAGE RATE? | | | | what you need and only paying on what you take, |
| If you already have a very low first mortgage rate, it | | | | these adjustable rates can rise rapidly and cause you |
| may not be wise to cash-out refinance. If your rate is | | | | a harsh financial burden. When considering an |
| going to increase more than one point, it probably will | | | | adjustable rate equity mortgage, make sure that you |
| cost you too much in interest over the life of the loan | | | | budget yourself to weather the worst. |
| to make a full refinance worthwhile. | | | | To sum up, both of these options offer you great |
| YOU WILL GET THE LOWEST RATES ON A FULL | | | | opportunities to use your home's equity for a financial |
| REFINANCE | | | | benefit. You should consider a full refinance if you can |
| If saving money is your primary concern when | | | | lower your first mortgage rate considerably, but should |
| refinancing, especially when debt consolidating, a full | | | | probably seek an equity loan if you already have a |
| refinance will give you the lowest fixed rates. | | | | fixed rate below the current par rate. Home equity |
| However, this option will not give you the flexibility that | | | | loans usually come with lower closing costs, are |
| home equity loans often do. | | | | generally better for you if you want flexibility to take |
| HOME EQUITY LOANS ARE CHEAPER | | | | money only when you need it, and give you the option |
| With moderate to excellent credit, you can usually | | | | to access your equity again as you pay off previous |
| obtain home equity loans with little or no closing costs. | | | | draws. |