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Refinancing through a home equity line of credit (HELOC) is useful if you want to extend your draw period so that you can get more favorable loan terms.
With rapidly rising home values, and comparatively low interest rates let us learn more about how refinancing a HELOC could benefit you.
If you are able to save money, save interest, and pay off your debt within a comfortable, structured situation it will let you live a more peaceful and happier life.
Qualifying for a HELOC
A HELOC qualification is the same as any form of loan or credit. Have a stunner credit score so lenders are confident of you paying your bills on time.
Another factor to pay attention to is your loan-to-equity ratio. ie. the value of your home after you subtract any existing loans against the home.
The ideal ratio is 80-20 where they will lend up to 80% of the equity.
Then comes your income. Do you make enough to consistently pay your loan? If you have a joint income from your spouse you will qualify with better rates.
How to refinance
- New loan terms by modifying your existing HELOC.
- Get a new HELOC to extend the draw period, lower rates, and if the value of your home has increased it will fetch you more.
- Refinancing the HELOC and mortgage together so you better overall terms, more negotiating power, and a comprehensive way to restructure your payments. particularly if the HELOC is on a variable rate so with a fixed rate you can lock your rates.
- A home equity loan to pay off HELOC so you lock in fixed interest rates and payments.
Weigh down your financial position before getting into any type of commitment. Because you could lose out on your home in case of defaulting the payment.
Reference Source: Next Advisor
