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Refinancing vs Line of Credit
Refinancing vs line of credit are two popular options you have when deciding the best way to take equity out of your home. Sometimes it makes sense to establish a line of credit. But in other situations it's better to get a cash back refinance mortgage loan.
You can find out which loan is best for your situation by doing some simple math. The amount of money you need to borrow and the length of time you need to pay it back really determines if refinancing vs line of credit loan makes the most sense.
Home equity lines of credit are based on adjustable type mortgage rates and move up or down when the Fed raises or lowers the prime rate. If you don't need to borrow much money and plan to pay off the loan in a short amount of time, an equity line of credit may work best for you because you pay the least amount of interest.
An advantage of a home equity credit line is banks offer their lowest interest rates on adjustable mortgage rate type loans. Also, equity lines of credit usually come without the typical closing costs you pay with a cash back refinance mortgage loan.
Average closing costs on a refinance loan usually amount to several thousands of dollars. So when you are trying to decide between refinancing vs line of credit that should factor into your decision.
Another advantage of a home equity credit line is they are more flexible than a cash back refinance mortgage loan. With a home equity credit line you only pay interest on the amount you borrow. The remainder of the credit line is available at any time without paying any interest.
Home equity credit lines work well for smaller loan amounts, but if you need a large amount of money, say $75,000 to $100,000, you may want to consider a cash back refinance mortgage loan.
A cash back refinance mortgage loan is a first mortgage and most are amortized over a 30 year payment schedule. That keeps your payments more affordable on a larger loan amount. Most home equity lines amortize over 10 years or 15 years because they are a second mortgage loan.
Another consideration when trying to decide between refinancing vs line of credit is the interest rate you currently have on your first mortgage. If you have a low interest rate on your first mortgage you may want to take advantage of a home equity credit line so you can keep your low rate on the first mortgage.
If you have a high interest rate on your first mortgage, a cash back refinance mortgage loan with a lower interest rate might make more sense. Just remember to do the math because the average closing costs on a refinance loan will amount to several thousands of dollars.
Until you repay the loan closing costs you won't be saving any money even if your monthly payment is lower. Figure the number of months it takes in payment savings to cover the typical closing costs of a cash back refinance mortgage loan to see if this makes sense for you.
These simple tips should help when deciding if you should establish a line of credit or get a cash back refinance mortgage loan. Do the math to find out if refinancing vs line of credit makes the most sense for your situation.
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Washington Times
SBWire (press release), WI - 18 hours ago
Westport, Connecticut based Mortgage Broker Don Caiati reveals mortgage refinancing secrets at a new web site that is full of free reports, a home buying ...
Refinancing suddenly booms Honolulu Advertiser
Lenders Backlogged By Refinancing Rush Washington Post
Low Mortgage Rates Bring Refinancing Boom MSNBC
Forbes - Modesto Beeall 24 news articles
Telegraph.co.uk
New York Times, United States - 10 hours ago
Of course, buying a home is a more lengthy process than simply calling up a mortgage broker to refinance, and activity typically slows during the holiday ...
Long-Term Mortgage Rate Falls Again Wall Street Journal
Banks' mortgage rates fall below 5% Boston Globe
Homeowners with good credit scores are poised to capitalize on ... Baltimore Sun
Scripps News - AHNall 95 news articles
WJBF-TV
Bloomberg - 20 hours ago
The Mortgage Bankers Association’s index of applications to purchase a home or refinance a loan dropped to 1143.8 for the week ending Jan. ...
Mortgage rates fall to record low again Forbes
Freddie Mac: Benchmark mortgage rate continues to new low MarketWatch
Bold government action can solve housing crisis North Texas e-News
American Banker - Connecticut Postall 596 news articles
Stockton Record, CA - 4 hours ago
Under the Cardoza plan, the payment on that mortgage refinanced to 4 percent fixed rate would drop to $1194 a month. Contact reporter Bruce Spence at (209) ...
Reuters - Jan 7, 2009
The jump in applications during December may have been driven by homeowners already "on the fence" and prepared to refinance on a drop in mortgage rates, ...
Mortgage applications down in latest survey Forbes
Week-to-week mortgage applications down 8.2% MarketWatch
Fewer apply for home loans; credit line delinquencies increase Los Angeles Times
KVOA.com - Kansas City Starall 63 news articles
Boston Globe
Bloomberg - 6 hours ago
... to purchase or refinance homes,” Rosengren said. The average rate on a 30-year fixed-rate mortgage dropped for a 10th week to 5.01 percent yesterday, ...
Rosengren sees path to recovery Boston Globe
Fed's Rosengren says recession more severe than thought Reuters
all 52 news articles
Los Angeles Times
Wall Street Journal - 10 hours ago
"Despite efforts by Congress to address this issue, not enough lenders have come to the table to help borrowers with bad mortgages refinance into new, ...
Citigroup reaches agreement with key senators on mortgage ... Minneapolis Star Tribune
Citigroup agrees to allow judges to help modify some mortgages IdahoStatesman.com
all 562 news articles
TopNews
Boston Herald, United States - Jan 1, 2009
If I refinance the mortgage on my current house, will I hurt my chances for getting a loan for a new place later on? A: No. Refinancing a loan shouldn’t ...
MORTGAGES: 30-year Mortgage Rate Falls For Ninth Straight Week To ... CNNMoney.com
Mortgage Rates Hit 37-Year Low Poynter.org
Home-Mortgage Rates' Next Stop: Below 5% Wall Street Journal
Ventura County Star - Wall Street Journalall 457 news articles
Plano Star Courier, TX - 16 hours ago
“Quite a few people have remortgaged,” said Craig Jarrell, loan officer with Pulaski Mortgage. “Most people who refinance are new homeowners as recent as ...
Cincinnati.com, OH - Jan 3, 2009
... 2009 With US mortgage rates the lowest in 30 years, local lenders say they've seen a strong surge in loan applications as homeowners seek to refinance ...
Waco banks seeing a boom in mortgage refinance applications Waco Tribune Herald
Borrowers seeking to refinance may face challenges WTOP
As mortgage rates slide, refinancing applications take off Dallas Morning News
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