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Refinancing Equity Loans

A home equity line of credit, or heloc, is a loan that is basically taken out of the value of your home. Lets assume that your home is worth $300,000. (You would need an appraisal to verify this amount) Now lets say that you had $100,000 of your loan that you still needed to pay. By subtracting the $100,000 from the appraised value of the home, $300,000, then there would be $200,000 in equity produced by your home. A lender/creditor will generally offer you 80-90% of your home's equity, in this case, between $160,000 and $180,000. You can use this money to make additions to your home, make repairs, etc., which will, in turn, increase the value of your home. The $160,000-$180,000 is not free money, however, and you will be charged interest just like any other loan. Similarly, just like any other loan, the interest rates will more than likely fluctuate higher and/or lower than the interest rate you agreed upon. If it so happens that the interest rate decreases a significant amount, then you can choose to refinance your equity loan in order to realize the savings that would be produced by the lowered rates.

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For more "equity" based information, check out
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