Refinance Home Equity Loan

There are several things to consider.

A home equity loan is a kind of loan in which you borrow the equity of your home. The home equity rate is much lower than most of the credit card rate. 100% of the interest rate of this loan is tax deductible up to $100,000.

Just like your other mortgage, you have to pay the lender back otherwise they can foreclose your house.

Types:

--Home Equity Loan. The bank usually lend you 80 or 90% of your equity in your house or in some case 125% of LTV. You get a lump sum of money and you make a fixed monthly payments just like your other mot gage.

--Home Equity Line of Credit. The money you get is set aside in a reserve account. You can get your money from this account thru ATM, check or by phone. This is like a revolving credit line that you can borrow from it. This is usually set for 10 to 15 years.

The downside to these accounts is that you are swapping short term debt for long term loan.

Advantages;
-It is very cheap.
-Interest rate can be 100% tax deductible up to $100,000
-It is a quick way of getting large sum of money to pay medical bills, credits cards, tuition fees and other big ticket times.
-You can ay back only the interest of the loan until it matures.

Disadvantages:
-It reduces the equity of your house.
-Total cost over the life of the loan can be expensive.
-Your loan stays the same, even if your house values depreciates.
-The back can foreclose your house if you don't pay on time.
-You might be tempted to use your credit card again after paying them with this loan and repeat the cycle all over again.

Now if you have already a home equity loan and you want to refinance them to take advantage of the low interest rate, there are several things to consider:
-Shop, shop and shop. Don't fall on the bank' s gimmick rates and other freebies.
-Ask the bank about upfront fees and other charges.
-Compute your total financing cost- take note of your interest rate.
-Ask the bank about closing cost including points. One point is one-hundredth of your loan amount.

Get these all in dollars and not in percent.
Remember, your house is on the line, so take these things seriously that is when you refinance.