Refinancing Equity LoansHomeowners may choose to refinance loans when mortgage rates drop. Refinancing loans saves the homeowner money because, in relation to the decreased interest rate, the monthly mortgage payments decrease. Refinancing loans can allow the homeowner to spend the saved money on home repairs, or put more money towards paying off the principal of their home loan, since any payments made that exceed the minimum payment go towards the principal. Refinancing saves the borrower money by paying off the principal faster, and thereby paying less interest in the long run.
You may also choose to refinance in order to consolidate debt. A homeowner can consolidate their credit card debts with their loan, and make only one monthly payment. This way, the borrower can avoid paying the high interest rates on credit cards, and only be charged the lower interest rate applicable to their mortgage.
Mortgage calculators can be used to calculate how a change in interest rates would affect the monthly payments and the ensuing change in the term of the loan, thus helping the borrower in making decision to refinance.
Refinancing your equity loan? Check out our > MORTGAGE RATE CALCULATOR <