Home Improvement: Refinance Your Mortgage or Get a Home Equity Loan?By Gabriel Traverso
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Homeowners are often bombarded with terminology and loan options sufficient to confuse even the most level-headed of us. The process doesn't have to be difficult or confusing. Your options are really quite simple.
Home Improvement Loan Options: What's Best For You?When it comes to getting a home improvement loan you really have two main options: either refinance your existing mortgage or get a home equity loan. But how do you know which loan is the right solution for you?
Mortgage Refinancing vs. Home Equity LoansWhen considering your options for a home improvement loan you must first understand your existing mortgage. What interest rate do you currently pay? Do you have a fixed-rate or an adjustable rate loan? The answers to these questions dictate in part which mortgage option is right for you.
Cash-Out RefinancingRefinancing your mortgage could be the right move if you are paying a high rate or have an adjustable rate mortgage. An ARM is going to reset several times over the life of the loan and your payments may go up or down. If you expect them to increase soon or you can get a better rate than you have now, refinancing could make more sense. You may improve your mortgage well as get your home improvement money.
Home Equity LoansA home equity loan doesn't affect your existing mortgage at all. So if your current mortgage has a low fixed rate you probably don't want to mess with it. This is where the home equity loan comes in. A home equity loan is a second mortgage that you take in addition to your existing loan. You can opt for either a fixed rate or adjustable line of credit and you borrow only what you need for your home improvement plans.
Finding the right loan doesn't take a rocket scientist. Review the terms of your existing mortgage and compare your rate with what's available today. Then start shopping for a home improvement loan. Make sure to check with at least three lenders and compare their offers to ensure you get the best deal you can--and ask lots of questions!
About the Author
Gabriel Traverso is a freelance writer, independent musician, and artist. He resides in Reno, NV.
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