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Home Equity Loan or Mortgage Refinance? What Homeowners Should Consider

Homeowners who want to take out a loan may want to consider both home equity loans as well as refinancing their existing mortgages.

Home equity lines of credit (HELOCs) allow homeowners to tap into their home equity. Many use it like a credit card, only taking out what they need.

Refinancing an existing mortgage may also make sense. Cash-out refinances are a popular option that allows homeowners to replace their existing mortgage with a new loan that is for more than their loan balance. Homeowners can then get that extra money and use it to do things like pay off debt, start a new business, or make home improvements.

“They’re both valid options that you would want to consider for tapping that equity you have,” said Mosi Gatling. She is the senior vice president of strategic growth and expansion at New American Funding.

“Be sure to take both options, analyze them for the costs, and also what that [new] monthly payment looks like, and see what the savings would be for you,” Gatling said.

Mosi Gatling NMLS# 557166