Home Equity Loan Refinancingby Marianne Salina
Loan Page Columnist
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As a homeowner, taking out a home equity loan can be an excellent way to establish credit and finance expenses such as education or home improvement expenditures. A home equity loan is a second mortgage that uses your home as collateral to establish a line of credit that gives you a maximum amount of money over a certain time period. Home equity loans are in addition to your mortgage, and just like your mortgage rates, they can be refinanced to achieve a lower home equity loan rate.
Home Equity Loan RateA home equity loan sets a fixed time to borrow money, sometimes over ten or twenty years. When you consider a home equity loan rate over this duration of time, you will want to lock in at a fixed rate if interest rates are very low. If you think that interest rates will drop in the future, an adjustable rate mortgage could be better. In addition to reducing your home equity loan rate, refinancing can also allow you to consolidate other debts that may have high interest all under one low rate.
Check the MarketRefinancing doesnt just apply to home equity loan rates. You or your financial advisor should keep an eye out for dropping interest rates in the market that may make refinancing your mortgage a good decision as well. In both circumstances, you can save a tremendous amount of money when fluctuations in interest allow you to create a new home loan under less expensive terms.
Sources:What Does Refinancing Mean? http://www.3erm.com/about.html
When Your Home is On the Line, The Federal Reserve Board, http://www.federalreserve.gov/pubs/HomeLine/
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