HELOC Refinance Loan
Home Equity Line of Credit (HELOC) is one of the helpful types of loans if you need cash upfront for renovation or other needs based on your credit limit. It should not be mistaken with home equity loans. But the real topic is, what happens when you seem to have run out of options to cover your credit? Refinance!
What is the Home Equity Line of Credit (HELOC) and its two stages?
HELOC is one of the popular loans in the early 2000s as home values increased, and homeowners looked for solutions for their growing equity.
It has two stages – the first stage is the ‘draw period.’ It’s the most affordable and tempting stage as borrowers only pay for the interest for the first couple of years, usually five or ten years. The second stage is the ‘amortization period,’ where borrowers need to pay for the principal amount and interest.
But unfortunately, as borrowers enter the second stage, their monthly payments are set to balloon by hundreds of dollars, which can result in a sudden financial joint. To head off a significant rise in your monthly payments, it may be a good idea to consider refinancing your HELOC.
How does refinancing help?
With HELOC Refinance Loan, you have different options to pay off your current loan. It can help extend your draw period, lower your payments, or get another HELOC. Before the repayment cycle starts, refinancing your HELOC helps you to fend off the surprise of payment changes from interest-only payments to much higher, completely amortizing payments.
Refinancing to Lower Your Payments
If you’ve reached the amortization period of your HELOC, chances are you have a hard time adjusting to the dramatically increased monthly payments. Payments in this stage may be doubled from the draw period or more.
Home Equity Line of Credit refinancing would allow you to continue paying interest-only for another ten years, keeping your payments low. Nonetheless, bear in mind that you will still need to pay the principal back, and refinancing would only delay the immediate repayment.
Refinancing to Extend ‘Draw Period’
Refinancing to Access Additional Equity
If the value of your home has dramatically improved in the past decade, you’ll probably have more equity in your home than you had when your initial HELOC was issued. This is especially true if you used HELOC funds to upgrade your home and also improved its value. By offering a higher rating, a HELOC refinance would allow you access to the newly accrued equity to borrow against by giving an upper credit limit.
Refinancing to Access Additional Equity
If the value of your home has dramatically improved in the past decade, you’ll probably have more equity in your home than you had when your initial HELOC was issued. This is especially true if you used HELOC funds to upgrade your home and also improved its value. By offering a higher rating, a HELOC refinance would allow you access to the newly accrued equity to borrow against by giving an upper credit limit.
1. Current interest rates are higher than they were before you had the first HELOC.
2. You are nearing the end of the draw time for your HELOC, and you want to continue to have access to borrowing.
3. You want to concentrate on repaying your unpaid loan balance as soon as possible with beneficial loan rates and terms.
4. After your original HELOC, your home value has increased and needed a higher credit line to consolidate bills or fund a new project.
5. The increased HELOC payments or the repayment period resulted in financial pressure.
Talk to a Home Refinance representative today to know more about HELOC Refinance Loan. We’ll make sure to lay down all your possible options for your HELOC.