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The Freedom of Refinancing: Your Options


Refinancing your home equity loan is a terrific way to free up your hard earned money and build cash reserves.  It can also increase the rate of built-up equity in your home and reduce the lifetime of your original mortgage. 

In laymen's terms, home equity loan refinancing is another phrase for swapping home equity loans.  The reason for the swap - in the first place - is due to a difference in home equity loan rates.  When rates drop many homeowners refinance so they can obtain the lower rate and pay less interest than what they did in the past with a higher rate. 

Another saving, as a result of home equity loan refinancing, is lowered private mortgage insurance (PMI) costs. There is a good chance that your mortgage lender provided you with PMI, especially if you put up more than a 20% down payment. Assuming your refinanced home equity loan is no more than 80% of your homes current appraised value, you can be exempt from paying high monthly PMI premiums.  Make sure you inquire about this with you lender. 

You should also consider refinancing from a fixed rate to an adjustable rate mortgage (ARM).  This option can free up even more of your monthly wages.  This is an especially smart idea if you are planning to move soon.  With an ARM lower than a fixed rate mortgage, you can cut costs in the final months leading up to your move - and possibly enabling you to put up a greater down payment towards a new home.  

If you have an ARM that is steadily increasing in cost, you should contemplate the option of changing to a lower priced ARM or a lower fixed rate mortgage.  Even if the fixed rate is higher than your current ARM, it may be cheaper in the long run - especially if the ARM keeps progressively increasing.   The best way to foresee this is by staying informed and being aware of the current trends in the refinancing world.    

Shortening the term of your home equity loan is a sure way to drastically build equity in your home.  Although you will incur increased monthly payments, you will save a gorge of money over the lifetime of the loan.  Your chief concern should only be if you can actually afford to make the higher monthly installments. 

With an increased appreciation of your home, your equity is good game to be cashed out - especially if you need to free up money.  All you have to do is refinance for a larger home equity loan, which will allow you to cash out your previously built up equity.  Depending on how much equity you use and what your new home equity loan rate is, it is possible to obtain even lower monthly installments on your new mortgage.  Or, you can shorten the newly refinanced loan if you want to reacquire your equity back even more rapidly.

The last home equity loan refinancing option you should consider is more of a gamble than the others.  There are loans in existence called "automatic refinance mortgages" or "reverse rate mortgages" - Which guarantees your home equity loan rate to fall up to 1.5 % lower than your initial interest rate. 

Reverse rate mortgages are designed to offer B credit individuals an opportunity to build their credit history.  The idea is to steadily decrease the home equity loan rate over a time period - usually a few years - until it hits a predetermined bottom and turns into a fixed rate.  The gamble, however, is that these mortgages initially start with a higher rate than typical home equity loans.  So, when the rate of the loan does hit bottom, there is no guarantee it will be lower than what the actual current home equity loan rates are.   

Home Equity Loan Refinancing Guide

Home Equity Loan Refinancing Economic Terms & Definitions
Home Equity Loan Refinancing Refinance Mortgage 101
Home Equity Loan Refinancing Refinance Options
Home Equity Loan Refinancing Refinancing? Save $$ On Title Insurance
Home Equity Loan Refinancing Should You Refinance?
Home Equity Loan Refinancing When to Refinance?
Home Equity Loan Refinancing Step 1: Making a Decision
Home Equity Loan Refinancing Step 2: Be Prepared
Home Equity Loan Refinancing Step 3: Loan Choices


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