It’s easy to refinance a home equity loan into a mortgage. The only trick is figuring out the best option. Whether you’re refinancing on the basis of interest rates, or other factors, you’ll want to get everything lined up before going ahead.
The first thing to do is call your mortgage company and ask about the advantages. When you know what the fees are, the loan’s terms, the penalties for missed payments, and so on, you can start working out your own refinancing plan.
The next step is to talk to your lender. The main point here is to make sure that your lender is taking the opportunity to keep you in their books. The more you owe them, the more they have to offer you.
Keep in mind that when you’re checking out the offers from the different companies, it’s also a good idea to see what kind of credit report they have. A low credit score could really hurt your efforts to refinance home equity loans.
Knowing your options is half the battle, but once you’ve done that you should be able to determine which will work best for you. In some cases, you might want to consider paying a lower interest rate to get a longer time period.
In others cases, you may decide that the lower cost of the interest rate is worth the interest rate. Try to be realistic about these decisions, since there’s no getting around paying off your loan.
Having the loan refinance is not as simple as signing on the dotted line. You will need to make a few important choices.
Do you want to go with the lowest interest rate? If so, this is a big question to ask yourself. By the same token, if you can get lower payments, go for it.
Also, you’ll want to discuss what will happen if you default on your loan. This will depend on the company that you’re working with, but generally you’ll be able to go to another lender.
You may want to reconsider if you can get a foreclosure or short sale instead. While this isn’t quite as quick as a refinance, the payoff will still be the same.
Lastly, consider what you can do to boost your credit report. Though there’s no getting around the fact that you have a mortgage, it doesn’t mean that you can’t pay the bill on time.
Your credit rating will take a hit when you don’t pay your bill, but it will go up again when you do. Taking the extra few days to do some cleaning up before you go ahead with the refinancing will help you feel better about the whole thing.