Refinancing Equity Loans, Home Equity Loans, Mortgage Calculator, Current Mortgage Rates, HELOC

Is a home equity loan right for me?
Q: I recently purchased a new home and now want to put an in-ground pool in for my children to enjoy. My mortgage is $194,500, and my home is appraised at $260,000. Should I get a fixed home equity loan to purchase the pool? I want the lowest monthly payment possible.

A: You'll get a lower rate initially on a home equity line of credit (HELOC), but that rate will fluctuate over time with changes in the interest rate that the loan is priced on. (The loan's interest rate is usually priced based on the prime rate.)

Lower rates mean lower payments. The problem with a home equity line of credit is that you have to have the financial discipline to make monthly payments for more than the minimum payment. If you don't, you end up with a large balloon payment due at the end of the loan term. That could force you to sign up for a new loan to pay off the balance of the first loan.
A home equity line of credit is revolving credit, like a credit card, but unlike a credit card the balance has to be paid off by the end of the loan term. The revolving credit aspect allows you to pay down balances and then borrow the money again for another purpose without closing on a new loan.
A home equity loan will have one interest rate over the life of the loan and the payments are structured to pay off the loan over the loan term. You won't have to worry about a balloon payment, and you won't have to worry about rising interest rates over the life of the loan. It's the conservative choice when financing your new pool.




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		Cash-out refinancing vs. home equity loans
	Q: Can you get money out of refinancing your home to use for major home repairs? Or should you just get a home equity loan? There is only about a 1 to 1.5 percent difference in the two loan rates.


		Is a home equity loan right for me?
	Q: I recently purchased a new home and now want to put an in-ground pool in for my children to enjoy. My mortgage is $194,500, and my home is appraised at $260,000. Should I get a fixed home equity loan to purchase the pool? I want the lowest monthly payment possible.


		Loan consolidation...Lower your payments and get a tax break!
	Most of us can run up credit card debt without even knowing exactly how we did it. We look at that statement with the big numbers and try to remember where the money went. A few dinners here, some clothes there, a short weekend getaway, late charges and, finally, over-the-limit fees. Then add lots of interest that your parents used to be able to deduct from their taxes but you can't.


		What is cash-out refinancing?
	Cash-out refinancing is a transaction in which a new mortgage is issued that is greater than the outstanding unpaid principal balance of the previous mortgage. Cash-out transactions allow homeowners to spend the equity they have accumulated in their homes. It differs from a home equity loan or line of credit in that it's a new mortgage, not a second loan against the equity in a home. Both cash-out refis and home equity loans provide vehicles for taking cash from the home's equity.