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CASH-OUT REFINANCING VS. HOME EQUITY LOANS
What is the difference between these two types of loans? Which
would be better for you?
Cash Out Refinance Loans and Home Equity Loans Both Offer Tax Breaks!
Both of these loan options offer tax-deductible borrowing power for
high-cost expenses like home remodeling and/or the cost of sending
your child to school. However, this tax break is the only similarity that
cash-out refinancing and equity loans share.
The table below offers a comparison of the main differences between
the two loan types. Contrasting the features of each loan will assist
you in selecting which loan is better for you. You can also
contact us
for help in your decision.
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Cash-Out Refinancing |
Home Equity Financing
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| One loan with a single payment. |
You can choose between a lump sum loan or a
revolving line of credit. |
| You refinance your current
mortgage for a higher amount using
some of the built up equity in your home. |
You can borrow some of your
home's equity, or all of it. The choice is yours. |
| Loan terms are longer than
equity loans or lines of credit. |
Equity loan terms are shorter
than cash-out refi terms. |
| Interest rates associated with cash-out refinancing are typically lower than
the rates associates with home equity financing. |
You only pay
interest on the money you are using when you utilize an equity
loan or line of credit. You can use any amount of the money at
any time, w/o having to apply again. |
Some additional tips that will help you choose what type of
loan is best for your cash necessities.
How fast do you need the money?
The closing times of home equity loans are faster than
refinance loans. Typically, Star Loan Services can close your equity
loan in less than one week, while refinance loans can take up to two
weeks.
Do you mind paying fees?
The fees associated with home equity loans are negligible compare to
refinancing fees. Points are also involved with refinance loans.
What is your interest rate on your current mortgage?
If the interest rate of current mortgage is a low rate, refinancing in order
to get cash-out is not a wise move. Even though the interest rates of home
equity loans and lines of credit are higher than when you cash-out, obtaining an
equity loan is smarter than refinancing and losing the low rate you have on your
existing mortgage.
How long do you need the loan?
When you refinance, you are typically restricted to a term of 15 or 30 years.
When you apply for a home equity loan you have the option of much shorter
terms. A shorter term minimizes the amount of money you pay in interest.
LET US HELP YOU IN YOUR DECISION MAKING!
Contact Star Loan
Services.
One of our mortgage specialists will help you decide if a
cash out refinance
or home
equity loan is better for you.
Apply for a cash-out refinance loan.
Apply for a home equity loan.
Preparing for Refinancing
Cash-Out Refinancing Guide
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