| Making home improvements, home remodeling, adding | | | | loan (HEIL). HELOC second mortgages provide you |
| onto a home and debt consolidation are some of the | | | | with the flexibility of borrowing all or part of your equity |
| most popular reasons people cash out on their home | | | | and you only pay interest on what you use unlike a |
| equity. But the question is, which should you choose, | | | | HEIL or refinance. Because HELOCs work like credit |
| mortgage refinancing or a home equity line of credit | | | | cards, you can pay down your balance and borrow |
| (HELOC)? | | | | again without having to apply for a new loan. And, |
| A mortgage refinance loan is when you replace your | | | | according to ehow.com, there are no closing costs for |
| current mortgage with a new loan. People refinance | | | | second mortgages, as there are with refinancing. |
| their mortgages for a variety of reasons including, | | | | If you have an adjustable rate or high interest rate |
| refinancing from adjustable rate mortgages (ARMs) to | | | | mortgage that you want to refinance into a lower |
| fixed interest rate ones, liquidating equity into cash | | | | fixed rate while cashing out on equity for home |
| (cash-out refinance) or to reduce monthly payments | | | | improvements or other purposes, a mortgage |
| and extend the loan term. A mortgage refinance has | | | | refinance may work the best for you. However, |
| the same costs as a mortgage, such as loan | | | | according to ERATE.com, if the rate on your existing |
| application fees, loan origination fees, and appraisal | | | | first mortgage is substantially lower than that of |
| fees. | | | | current market rates and if you have been making |
| A variable rate HELOC, where the interest rate and | | | | payments on your mortgage for a period of five years |
| annual percentage rate (APR) can move up or down, | | | | or more, then a second mortgage may be a more |
| depending on the Prime Rate published daily in the Wall | | | | sensible financial solution than starting over with a new |
| Street Journal, is one of two popular second mortgage | | | | first loan. |
| options, with the other being a home equity installment | | | | |