Refinance with a HELOC
URL:
http://www.mortgageloan.com/refinance-with-heloc
Author:
Catherine Brock
Published: December 17, 2006
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Refinance with a HELOC
http://www.mortgageloan.com/refinance-with-heloc
Refinance with a HELOC
"That'll be a $10 additional service charge, please." Heard that before? These days, you can hardly
breathe without incurring some type of additional charge or fee. The financial industry is notorious for
finding new ways to charge you. When it comes to a
second mortgage refinance, it's hard to find one that isn't loaded with extra costs.
HELOC: The low-down on closing costs
The traditional refinance is usually the first financial instrument that homeowners consider. But
another option worthy of consideration is the home equity line of credit (HELOC). Its low cost and
flexibility make it an attractive strategy compared to a traditional refinance mortgage loan.
This type of home equity loan usually has few, or no, costs associated with closing. Compare that to a
traditional mortgage, which may have closing costs of several thousand dollars.
Other factors to consider
It wouldn't be wise, however, to make refinance decisions based on closing costs alone. Consider these
factors, as well:
• Most HELOCs allow you to pay interest only in the first few years, but these
minimum amounts won't pay down your balance. Anything you owe at maturity
will have to be paid in cash or refinanced. Plan on making large and regular
principal payments throughout the term of the second mortgage.
• HELOC rates are variable. This is desirable when interest rates are dropping and
not very appealing when rates are rising. In recent years, rates have gone up;
therefore, if you're a HELOC owner, you've paid the price. If rates continue in
their upward trend, the added interest you incur could outweigh the money you
saved in closing costs.
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Refinance with a HELOC
http://www.mortgageloan.com/refinance-with-heloc
Compare current rates of traditional mortgages and
HELOCs . Run comparisons to determine