If you're thinking about borrowing money using your home as collateral, you should consider your options.
Which lending option is right for you depends on a number of factors, such as:
Before you decide, you should understand the basics.
When you refinance, you are replacing your current mortgage with a new loan to lower your monthly payments, get cash out to make a purchase, pay off debt or achieve other financial goals. With this option, you will have one monthly payment.
You may find your current first mortgage rate is better than the refinance rate available and you want to keep what you have. Now may be the time to look at a 2nd mortgage, also known as a home equity loan or line of credit.
Home equity loan and Home equity line of credit are two different kinds of loans that are different from your first mortgage and require a separate monthly payment. You borrow against the equity built up as a result of paying your mortgage, so the more you've paid down, the more you can borrow.
There are pros and cons associated with each option. Typically, with a traditional refinance , you'll have:
With a ABFL Refinance, you'll have:
And with a home equity loan or line of credit, you can expect:
