Cash Out Refi Vs Heloc: LoanLove.com's New Guide To Analyzing The Pros And Cons Of Each Loan

SAN DIEGO, Oct. 18, 2013 /PRNewswire-iReach/ -- LoanLove.com is a borrower advice website that provides detailed insights into the mortgage industry in a fun and entertaining way. The team at LoanLove.com is devoted to help empower both first time and experienced homeowners with valuable resources, first-class knowledge and connections to top-rated industry professionals and has the mission of helping consumers and borrowers to obtain the latest information on mortgage lending trends, the real estate market and the U.S. financial landscape in order to help them obtain a home loan that they will love. Loan borrowers can be assured they are getting the most current news in the mortgage world with Loan Love's guide videos and articles as shown in their newest featured article "Cash Out Refinance vs Home Equity Loan (Key Differences)." This new article guide highlights the cash out refi vs heloc debate by citing the advantages and disadvantages on both sides when working with either loan.

How a cash out refinance loan separates itself from a home equity line of credit can be seen in a few ways. The Loan Love article demonstrates this with the following statement: "First thing to know: While both a refinance loan and a home equity loan will let you access your home's equity, they differ in the way they "attach" themselves to your property. A refi loan is simply a brand-new mortgage that replaces your old mortgage, while a home equity loan is a loan in addition to your existing mortgage. That means that with a home equity loan, you'll still be paying your regular mortgage and you'll also need to pay the monthly payment for your home equity loan."

Now, how these loans can benefit loan borrowers can be seen in distinctly two ways. For instance, a home equity line of credit (heloc) can be favored over a cash out refinance loan for one reason: closing costs. Generally speaking, home equity loans usually support no closing costs which can help loan borrowers save thousands of dollars compared to a cash out refinance loan – a loan that usually comes with all the same closing costs of a purchase mortgage.

On the reverse side, a cash out refi loan will commonly have lower interest rates. This is usually the case since a cash out refinance loan is considered a first-position mortgage loan, or in layman's terms, the primary loan of a borrower's home. As a result, interest rates for a cash out refi tend to be lower.

That being said, there are a few things to consider before deciding on which loan is best for a loan borrower. For instance, borrowers should be fully aware if they are financially capable of taking on the financial burden of a loan. Can the loan borrower handle an additional home equity loan alongside other current mortgage obligations? If not, a heloc may not be the right choice for a loan borrower. To add to the debate, the article also expresses the following:

"What's more, unless you really, really need the money, a refi loan typically doesn't make sense if it means you need to pay a higher interest rate than the rate on your current mortgage. Likewise, if you don't have plans to stay in your home for several years, paying all those closing costs that are associated with a refi loan may not make sense either. And if you've been paying on your home for a long time – say, 20 years of a 30-year mortgage – it may not make sense to refinance either, since you'd be at the point where your payments are being applied mostly to the principal (in plain English, you'd be building equity more quickly)."

It all comes down to what the loan borrower needs for their financial setup and if they are capable of handling the loan. Taking time to crunch out the numbers with some loan calculators can really help borrowers benefit from their mortgage options. For more information on the cash out refi vs heloc debate and to avail on their loan calculators, please visit LoanLove.com.

Media Contact: Kevin Blue, LoanLove.com, 949-292-8401, contact@loanlove.com

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SOURCE LoanLove.com



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