Mortgage / Equity

Equity
Home Equity
Mortgage
Refinance Equity Line of Credit

Refinancing an equity line of credit can save a property owner quite a bit of money on interest charges.

Refinancing means that you get a new line of credit with a different interest rate that takes the place of an existing line of credit. The refinancing will pay off any unpaid balance your existing line of credit.

The reason why a property owner would want to refinance an equity line of credit such as a home equity line of credit is simple to get a better interest rate. Refinancing to a line of credit with a lower interest rate can save a homeowner hundreds of dollars by lowering interest charges.

How to Refinance an Equity Line of Credit

The first place that a property should look when they want to refinance an equity line of credit is their existing lender. If you have an existing equity line of credit, call the lender that issued it and ask for a better deal.

Lenders want your business so there’s a good chance that your existing lender will let you refinance your equity line of credit. If you have a good record of paying off balances on your equity line of credit the lender might be more likely to listen to you.

Paying off the balances on your equity line of credit before asking for refinance can help you get a better rate. This shows that you’re responsible and likely to repay the lender. More importantly it demonstrates that you are in a position to switch lenders.

When to Refinance an Equity Line of Credit

The time to refinance an equity lien of credit is when your credit or income status has improved.

If your credit rating has improved since you opened your equity line of credit you could be able to get a lower rate through refinancing. Lenders will give those who have good or excellent credit ratings a lower interest rate on equity lines of credit. If your credit rating has gone up contact you might be in a position to refinance.

Another time to refinance is when your income has increased. If your income has increased substantially and you can verify it you could be able to get a good deal on refinancing. To do this you will have to present proof of increased income such as bank statements.

You might also be able to refinance when you have more equity available in your property. If your property’s value has gone up since you got the line of credit or if you’ve paid off a large portion of your mortgage you could have more equity. Lenders might give you a better deal on refinancing if you have more equity available.

When Not to Refinance

Do not refinance your line of credit if you can’t get a better interest rate or more credit. If there is no benefit to refinancing, refinancing is a waste of time and effort.