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Posts Tagged ‘mortgage’

The end of the second quarter of 2010 is almost at an end and mortgage interest rates are currently near historic lows. This is very encouraging for anyone looking to secure a new mortgage or to refinance an existing mortgage at a lower interest rate. Now might be a great time to consolidate some high interest bearing credit card debt, or to invest in a new addition to your home, or pay for an education.  Generally speaking, there are two options to tap the equity in your home: cash out refinancing or a home equity loan.

Cash out refinancing differs from a home equity loan in a few ways: A cash-out refinance is a replacement of your primary mortgage, a home equity loan is a separate loan in addition to your primary mortgage, interest rates on a cash-out refinance are often times lower than what you are charged for a home equity loan, although not always, when you do a cash-out refinance, you will pay closing costs, and you are not charged closing costs when you secure a home equity loan

Home equity loans are generally better under the following circumstances: you need access to an open line of credit, you plan to pay off the home equity loan before your primary mortgage loan, It never makes sense to refinance a higher amount at a higher rate. You should also pay attention to what you will be charged in closing costs if you decide to do a cash-out refinance since closing costs can often add up quickly, making the cost of refinancing too much to justify.