Home Equity loan refers to the second mortgage that turns the equity into cash, to be spent on home improvements, debt consolidation, education expenses and other such things. Generally the equity loan falls under the category of equity debt. It is referred to as second mortgage because it is secured by the property like the original or the primary mortgage. Sometimes, the situation arises when the time to pay the installment for equity loan is almost going to be over and we are out of cash. At this point of time, the facility that can help is the refinance home equity loan.
Samla lån means getting a loan to pay off an old loan with the amount of the new loan. With refinance home equity loan, its not that we can only pay off the old loan but there are other benefits too that we can avail. Some of vital benefits are as follows:
- Refinance home equity loan; first of all, lowers the interest rate on the mortgage amount.
- Secondly, it shortens the tenure of the equity loan, as it can be paid back within limited time.
- Third and the most important point is that saving some money for the future is possible with refinancing.
- This type of loan is quite flexible in nature as it provides the opportunity to shift from fixed rate loan to adjustable rate loan.
- Lastly, this type of loan can prove to be helpful for debt management and debt settlement.
Home Equity loans, especially the home equity loans are repaid in a shorter period than first mortgage. Generally, mortgages are repaid over 30 years. And home equity loans have a repayment period of 15 years, although it may be as short as five and sometimes can be as long as 30 years. In case of refinance home equity loan, the tenure depends on the type of loan. There are different types of loan like the Fixed Rate Loan, the Adjustable Rate Loan, the Balloon Rate Loan, Jumbo Rate Loan, Equity Home Loan Rate, etc. And with the tenure period there are, 30 years Fixed Rate Loan, 15 years Fixed Rate Loan, 10 year Fixed Rate Loan. Among the Adjustable, there is, 5/1 Adjustable Rate Loan, 3/1 Adjustable Rate Loan etc.
Next comes the interest rate of the refinance home equity loan that basically depends on the above-mentioned types of refinance loans. Different type of loan posses different rates. Here it is necessary to mention that along with these interest rates, some other fees and charges like appraisal fees, title fees, arrangement fees, stamp duties, closing fees, etc. that are also to be paid to the lender.
Summing up, while opting for refinance home equity loan, the rates should be properly known and should be compared before finalizing a lender. As the interest rates may vary from lender to lender. Along with this, proper consultation and counseling from a financial advisor must be taken, as there are ample of formalities, fees, charges etc. Lastly, the loan should be availed depending on the financial situation, market condition and above all, a proper calculation of the amount that can be saved from the refinance option.