HELOC Refinance In Medina Ohio
Lower Your Expenses And Negotiate Your Terms With A HELOC Refinance
How does HELOC Refinancing work?
There are two periods in a HELOC Refinance, a draw period and repayment period. The repayment timeline can vary depending on your loan terms and institution. On average, individuals will get a 10 to 15 year term in which they get a 10 year draw period followed by a 15 year repayment period.
Within the 10 year term, your paying interest only and during the 15 year term monthly payments increase to pay for principal and interest. Homeowners are often surprised at how much their monthly payments are during the repayment period, in which case you arable to refinance your HELOC. You really want to consider your financial position before making any decisions. Monthly payment amounts can assume 5.56% interest
How do I get qualified for a HELOC Refinance?
The process of getting qualified for a HELOC Refinance is similar to a regular mortgage application. You will have to verify similar items like income and credit history. If you want to get a low interest rate having a great credit score is a major plus. On average, a 740 to 850 will qualify you but some institutions will take as low as 620. But a low FICO score may mean a higher interest rate and you could experience difficultly finding a lender. Another important qualifier is equity, how much equity do you have in your home? You’ll need to have enough equity in your home after taking out the new loan to the lender guidelines.
What are the best ways to refinance my HELOC?
During the repayment period, also called the amortization period, becomes too difficult financially there are a few ways to refinance your HELOC
- Talking with us about your specific situations will help us find the best lender for your situation. There are some lenders that can adjust your interest rate or offer home equity assistance programs if you are suffering to pay your mortgage.
- Apply for a new HELOC, this starts a new draw period which could help you in the long run. However, your interest rate could rise with this option. We recommend this option for young people that have more years to build more equity and make more money later.
- Getting a home equity loan is another popular option. You have the ability to be placed into a fixed amount, fixed interest rate, and a longer repayment period.
- Refinance your HELOC and mortgage into a new mortgage. We suggest refinancing into a 15 to 20 year mortgage, in order to reduce total interest payments. If your going to choose this option take into account closing cost, sometimes it’s best to keep the your house long enough for the cumulative monthly savings to outweigh the costs of refinancing.
What If You Owe More on Your HELOC Than Your Home Is Worth?
You may want to obtain a mortgage modification. If your HELOC is underwater refinancing it will be difficult, especially because the HELOC is tied to your home’s value. Some lenders can restructure your HELOC over a longer repayment period or reduce the interest rate to help you with your monthly payments.
What do you need to refinance your HELOC?
At the end of the day you have to show lenders that you can repay your loan, in order to be considered for a repayment option. In order to refinance you’ll need:
- An acceptable debt-to-income ratio. Your mortgage debt should not exceed a third of your gross income and your total debts should not exceed 43% of your gross income.
- You should have sustainable equity in your home.
- A qualifying FICO score, which varies with each lender
Is it better to get a HELOC or Refinance?
A cash-out refinance can have a fixed rate for the life of the loan and fees are paid upfront in closing costs. With HELOC, interest rates are higher, so depending on your financial position you can opt to a cash-out refinance. If closing costs aren’t an issues to pay, then this could be your best option.
What if I refinance into another HELOC?
Your likely to encounter heightened underwriting standards because as mentioned before, lenders are strict about homeowners being able to afford their payments. Some important details to consider are the hidden fees from lenders, your credit score, and home equity. It’s important to be in good standing financially to be eligible.