What is refinance plus

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Your home is not just a place to live, and it is also not just an investment. Your home can moreover be a handy source of ready cash to cover emergencies, repairs, or upgrades, obtained either through a mortgage refinancing or via a home equity loan.

Refinancing pays off your old mortgage in exchange for a new mortgage, ideally at a lower interest rate. A home equity loan gives you cash in exchange for the equity you've built up in your property as a separate loan. There are two common methods for a mortgage refinance, or "refi": a rate-and-term refinance and a cash-out loan. You should plan to continue living in your home for a year or more if you take this route. It can be a good idea to do a rate-and-term refi if you can recoup your closing costs with a lower monthly interest rate within about 18 months.

Home equity loans tend to have lower interest rates than personal , unsecured loans because they're collateralized by your property, and that's the catch: The lender can come after your home if you default. Home equity loans also come in two flavors: the traditional home equity loan, in which you borrow a lump sum, and the home equity line of credit HELOC.

For a set time period after you receive it, known as the draw period, you can generally borrow as little or as much of that credit line as you want, although some loans do require an initial withdrawal of a set minimum amount.

You may be required to pay a transaction fee each time you make a withdrawal or an inactivity fee if you don't use your credit line at any time during a predetermined period. During the draw period, you pay only interest on what you've borrowed. When the draw period ends, so does your credit line.

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I Accept Show Purposes. Your Money. Personal Finance. Your Practice. Popular Courses. Part Of. Tapping Your Home Equity. Home Equity Loan. Home Equity Line of Credit. Other Ways to Tap Home Equity. Home Ownership Refinancing A Home. Table of Contents Expand. Option 1:Cash-Out Refinance. Option 2: Refinance into a Loan.

The Bottom Line. Key Takeaways When refinancing a home equity loan, if you also want to refinance your first mortgage, a cash-out refinance is the way to go. If you are happy with your first mortgage, then you should simply refinance your existing home equity loan. In either case, having a good credit score and a low loan-to-value LTV ratio is crucial to getting the best refinance terms. Article Sources.

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