I would like to consolidate my debt and was thinking about refinancing the house. I do have a question about the difference between refinancing, home equity loans and second mortgages. How do I know what is best for my situation?
I would like to consolidate my debt and was thinking about refinancing the house. I do have a question about the difference between refinancing, home equity loans and second mortgages. How do I know what is best for my situation?
Refinacing is to hopefully get your mortgage at a better rate for lower payments each month but may cost you fees so you would need to find that out.
A home equity loan is a loan that uses your home as collateral and this may require a home inspection which will be an added cost.
A second mortgage is just that - another mortgage where you're borrowing against what the house is worth, it's similar to a home equity loan but I believe the payments are higher but the loan will also be higher and again, you might have many of the same costs and fees as if you were buying another home.
Rates are great now, so it's a good time to re-finance a mortgage. The fees can be rolled into the loan. Home equity loans have a higher rate for a shorter timespan. Some are set up so you write checks against a line of credit, so you control the balance. The interest is tax deductible for both.
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