Home Equity Loan Refinancing: Is it the Right Choice for You?
If you're considering taking out a loan against the equity in your home to pay off unexpected bills or finances, you may be wondering how to tell if home equity loan refinancing is the right option for you. If that's the case, then you need to keep reading, as we have brought together the world's finest experts on all things to do with home refinancing.
This way, you can better make an educated decision as to what the best way to get money out of your home is. By first educating yourself about the pros and cons of home equity loan refinancing, you should be able to make an easier decision about what your best option is.
The Benefits
The benefits of home equity loan refinancing greatly outweigh the disadvantages; especially when you consider the fact that you have worked hard to build the equity in your home. It only makes sense that you should be able to borrow against that hard work in your time of need.
The equity in your home is defined as being the difference between what you owe on your original mortgage, and the current market value of your home. Depending on how much you need to borrow, the amount you can get from home equity loan refinancing can make a considerable dent in your outstanding debts; or even pay them off altogether.
The Disadvantages
The draw back to home equity loan refinancing is that if you do not have enough equity built up, you probably won't be able to borrow the amount you need. This is also true if you are taking out a home equity loan when you have bad credit.
Most lenders will only loan you about 85% of the amount of equity you have built up in your home. This percentage drops considerably if you have less than perfect credit; with most lenders only offering to lend up to fifty percent of the total equity accrued.
Of course, this disadvantage of home equity loan refinancing can also be construed as a benefit, when you take into consideration the fact that by paying off the amount you are allowed to borrow on time; you will be rebuilding your credit in a much shorter time than through other methods. As you can see, if you are in need of immediate cash to take care of unexpected bills and expenses, home equity loan refinancing may be the best option for you.
