Home Equity Line Refinancing Basics

Get everything you need to know about home equity line refinancing here. We'll explain what it is and why you might consider it.

About Home Equity Line Refinancing

Home equity line refinancing involves taking out a new loan that is secured against your home to pay off an existing home equity loan. Most borrowers refinance to reduce their monthly payments and/or lower their interest rates. Home equity line refinancing can save you as much as hundreds on your monthly payment, since your interest expense is usually substantially reduced. Similarly, you can use home equity line refinancing to extend the repayment term of your loan, which can also lower your monthly payments considerably.

Why Home Equity Line Refinancing?

Here are some of the best reasons to consider home equity line refinancing:

• To secure a lower fixed rate. If you took out your original home equity loan several years ago and interest rates have since dropped, home equity line refinancing can reduce your payments substantially. The short-term costs of home equity line refinancing are often well worth the savings you will reap long-term.
• To rebuild your home equity. When you took out your home equity loan, you may have converted all of your home equity into cash. Though this may have served your financial goals well at the time, you may now want to reestablish equity in your home. Home equity line refinancing can help you rebuild equity in your home more quickly by paying the loan off faster.
• To convert home equity into cash. Some borrowers use home equity line refinancing to take out a larger home equity loan to convert more of their equity into cash. This can be helpful if you need to cover large expenses, such as renovations, a new car, or debt consolidation. With home equity line refinancing, you can get a larger loan with a lower interest rate to help you cover life's major expenses.
• To lower your monthly payments. If you are struggling to make the monthly payments on your home equity loan, home equity line refinancing can help. Even if you aren't having trouble making your payments, you still might want the monthly savings home equity line refinancing has to offer. Home equity line refinancing can reduce your monthly payments by extending your repayment term and/or lowering your interest rates. For more information, please visit our should you refinance page.