What’s the difference between refinancing and a home equity loan?

What’s the difference between refinancing and a home equity loan?

Refinancing involves replacing your existing mortgage with a new one, often to get a better rate. A home equity loan lets you borrow against your home's value.

Which option is better for consolidating debt?

It depends on your situation. Refinancing can lower your monthly payments, while a home equity loan provides a lump sum. Consider interest rates and fees.

Are there any risks with a home equity loan?

Yes, if you default on a home equity loan, you risk losing your home since it's secured by your property.

What are the costs associated with refinancing?

Refinancing costs can include closing costs, appraisal fees, and origination fees, typically ranging from 2% to 5% of the loan amount.

How do I decide which option is right for me?

Evaluate your financial goals, current interest rates, and how much equity you have. Consulting a financial advisor can also help.