Refinancing an existing home equity line of credit can save you
money on interest charges. It will also help you establish a
payment plan to help you get out of debt sooner. Another benefit
to refinancing is that you can get better terms, avoiding extra
fees associated with a line of credit.
Get Better Rates And Terms
Getting better rates and terms on your home equity line of
credit is one of the chief benefits of refinancing. With a line
of credit, you have a couple of refinancing options. You can
decide to refinance both your mortgage and line of credit.
Overall this will provide you with a low rate, but don't trade
in your low rate first mortgage for a more expensive refinance
home loan.
The other option is to just refinance your line of credit with a
second mortgage. A second mortgage can offer lower rates, either
fixed or adjustable.
Establish A Payment Plan
Refinancing a line of credit will help you establish a payment
plan. Before you apply for refinancing, calculate how much you
can afford in a monthly payment. This payment amount will give
you an idea of what terms to choose.
Just remember that your interest charges will be smaller than
what you are currently paying. Also, the shorter the loan,
typically the lower the rates are.
Find Better Terms
Tired of paying fees for such things as having a below minimum
balance with your line of credit? Then refinance for better
terms. Most refi mortgages don't have annual fees. While you
will have to pay closing costs to process the loan, you don't
have to worry about keeping a balance or paying the account off
early.
However, it does pay to check. So before you sign for your refi,
ask about any fees included. Late fees should be expected. Early
payment fees can usually be deleted from the contract by paying
a fee upfront.
While refinancing can save you money, it is important to shop
around for the right lender. Ask about their rates and terms.
Request loan quotes and compare to other lenders. Time spent
researching financing options is an investment that will pay off
for years to come.
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