Compare Refinancing and Second Mortgage Loans with helpful tips and advice from the home equity loan experts at BD Nationwide.
Refinancing vs Second Mortgage
When trying to determine what to do about your home, you have so many options to consider. As various companies disclose their terms, you may find it difficult to decide between a second mortgage and home refinancing. Here, we’ll take you through the basics of each so that you can make the best choice for your situation.
Obtaining a second mortgage is often referred to as borrowing against a home’s equity. It is also synonymous with home equity loans and home equity lines of credit. A second mortgage allows you to get cash immediately when you want to remodel your home, pay off bills, or consolidate debt. Home equity loans and home equity lines of credit are two types of second mortgages. A home equity loan allows you to get an immediate amount of cash; these are generally set at a fixed interest mortgage rate. On the other hand, a home equity line of credit provides the borrower with the ability to borrow against the equity up to a certain amount; the HELOC, as it is commonly called, is usually set at a variable interest rate.
Home refinancing means that you’ll be getting an entirely new mortgage with a new interest rate and term. Usually you will be refinancing in order to lock in at a lower interest rate. When applying to refinance your home, you’ll still have to pay some of the same fees you paid when getting your first mortgage: loan application fees, loan origination fees, and appraisal fees.