Home Refinance

Bills.com Team
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Highlights


  • You have many home refinance options.
  • A straight-up home refinance allows you to slash your rate and cut payments.
  • A cash-out refinance can consolidate your debt or pay for remodeling.
4.0
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(5 Votes)

Explore Your Options for Tapping Into Your Home Equity, Including a Cash-Out Home Refinance or HELOC.

Home refinancing is a great way to lower your mortgage interest rate, reduce your monthly payments, pay for renovations, or consolidate your debt. However, if you are thinking about refinancing your home and have never refinanced a home before, then you need the tools, tips and lenders to make sure that you get the best refinance loan for your needs.

Before you apply for a refinance loan, read the home refinance articles, advice, FAQs, videos, lender reviews, and additional resources available at Bills.com.

In a nutshell, qualifying for a home refinance is similar to qualifying for a mortgage. A refinance lender is looking for stable income, a good credit history, and a situation where the amount of the loan is less than the value of the property. In the refinance world, the phrase used for this concept is “loan to value,” or (LTV) for short. LTV is expressed as a percentage and an ideal LTV is 80% or less.

If you want to refinance to slash your interest rate and payments, Bills.com offers two options to help you start now:

  1. Our Mortgage Calculator helps you determine whether a refinance makes sense for you.
  2. Our Quick Quote page can help you find great mortgage lenders ready with rate quotes on the best loans for your situation.

Tap Into Your Home’s Equity With a Refinance Loan

If your home has equity and you need cash, you have two options to tap into your equity: cash-out refinancing or a home equity loan. Depending on your particular situation one may be better for you that the other financially.

Mortgage Refinance - When Is The Right Time?


Home Equity Loan at a Glance

A home equity loan is a loan on the difference between the market value of your home and the balance that you still owe on your mortgage. As a separate loan in addition to your mortgage, you do not usually pay as much in the closing costs as you do when refinancing. The interest you pay may be deductible if you itemize your tax deductions. Home equity loans are a good choice if your penalties for pre-payment on your original mortgage make refinancing impossible.

Cash-Out Refinancing at a Glance

Cash-Out RefinanceA cash-out refinance is refinancing your mortgage for more than the current balance on your first mortgage. Home loan mortgage refinancing usually has a lower interest rate than home equity loans, but if you borrow more than 80% of your home’s value then you may have to pay private mortgage insurance. If you have had your mortgage long enough that you are paying more principal than interest each month or if you currently have a good interest rate, it does not make much sense to refinance and a home equity loan will probably be a better option.

Which is Best For Refinancing Your Home?

Investments in the value of your home, starting a small business, or life-saving medical treatment are all good reasons to consider a cash-out refinance. However, you may end up paying more for your total interest than if you refinance your current mortgage at a lower interest rate and take out a home equity loan for a shorter term. Your final decision will depend on what you can afford for your monthly payments and if you are comfortable paying a larger total interest in exchange for lower monthly payments and lower interest rates.

If you are interested in debt consolidation or even debt relief then you may be able to get a lower interest rate with a cash-out refinance, but you lengthen the amount of time over which to pay off your loan. You might want to look into a home equity loan with a short term or simply re-budget and tackle your highest interest debt first and try to pay off your credit cards. This last method will probably save you more money in interest paid over time.

Whether you chose a cash-out refinance or a home equity loan, in either case, failure to repay your loan can cost you your home.

Now is a good time to refinance because rates are at historic lows. We built the Bills.com Mortgage Calculator to give you a quick Yes/No answer to the question of whether a refinance makes sense for you today.

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47 Comments

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  • 35x35
    Jan, 2012
    Jeri
    My husband has to refinance the marital home as part of our divorce. To remove me from the original loan what forms am I required to sign? They are trying to make me sign a TIL which shows the full amount of the refinance. I am not part of the refinance, my name is to be completely removed from any loans associated with the home. This is in Georgia.
    0 Votes

    • 35x35
      Jan, 2012
      Bill
      My first and last thought here is to recommend you not sign any document you do not understand. I believe most people are honest and live and work with the best of intentions. I also believe a few people believe it is fine for them to take advantage of others. On to your question:

      I assume the "TIL" you mentioned is the "Truth In Lending" Act disclosure a lender must give a borrower before closing a mortgage loan or refinance. You may need to sign a document acknowledging and approving the retirement of the original mortgage, and you almost certainly will be asked to sign a quitclaim deed, but I do not understand why you need to be disclosed on the new loan.

      Bring any document you do not understand to your lawyer for an explanation, and assurance that someone is not trying to take advantage of you.
      0 Votes

  • 35x35
    Dec, 2011
    John
    my house is worth 375k and i have 8 years left on a 15yr mortgage with a 75k balance, 5.125% apr...i have 40k in credit card debt with high interest rate...i can not afford to pay anymore than my current mtg payment. what is the best solution for me? John
    0 Votes

    • 35x35
      Dec, 2011
      Bill
      Based on the information you provided your monthly mortgage payment (principal and interest) is about $954. If you were to add the $40k credit card debt and refinance into a $115k, 15 year loan, your monthly payments would be about $808, based on a 3.25% interest rate. You will also have additional saving, because you wouldn't be paying the minimum charges on your credit cards, which should be about $1000 per month currently. If your goal is to lower your payment as much as possible, you could refinance to a longer term loan. If you took out a $155,000 loan at a 30 year term at 4.25%, then your monthly payment would be about $566. If you took out a 20 year loan at 4%, the monthly payment would be about $697. Lengthening the term lowers your monthly payment, but will cost you more over the course of your loan

      A disadvantage of consolidating your credit card debt in a refinance is that you would be switching your unsecured debt to secured debt. However, given your strong equity position and desire to reduce your monthly expenses, it would be financially beneficial to refinance and pay off the high interest credit card debt. Consolidating your debt is not a long term solution, if you run up your credit debt again. Take the necessary steps to avoid running up credit card debt in the future.

      I recommend that you apply for a loan.
      0 Votes

  • 35x35
    Nov, 2011
    Donna
    We are looking to refinance a 30 yr fixed loan. LTV and credit are excellent. Thinking about a remodel of the kitchen and baths. Do you think it makes sense to do a refinance where we can take equity out to pay for renovations. We have the funds in the bank but we could protect that and use the equity for costs. opinion? Thanks!
    0 Votes

    • 35x35
      Nov, 2011
      Bill
      Look at your entire financial picture. It does not make sense to gut your saving account if you have enough equity in your property. On the other hand, if your family has a high net-worth, adequate retirement savings, and an active investment strategy, then a refinance to remodel may not be necessary.

      As I write these words in mid-November, refinance rates are at historic lows and I cannot see them getting much lower. A refinance now to lock in a lower rate, whether you do a cash out or not, is a good idea.
      0 Votes

  • 35x35
    Oct, 2011
    Kevin
    HELOCs are great tools to use in consolidating debt, provided the consolidator is financially responsible, or ready to become so. Also, most people don't realize, but the can use their HELOC as their primary checking/savings account. There's really no reason not to. You can use a HELOC check or debit card just like you do a checking/savings account check or debit card. By using the HELOC as your checking/savings account, you let all that money offset interest in your HELOC instead of doing nothing sitting in your checking or savings account.
    0 Votes

  • 35x35
    Sep, 2011
    Tom
    We have a primary mortgage and 2 additional loans that exceed the value of our home. What government programs are available to apply for?
    0 Votes

    • 35x35
      Sep, 2011
      Bill
      The program to look into is the FHA Short Refinance program, although it requires your lenders to forgive principal balances, which would mean your two additional loans writing off as much as the entire balance. That does not seem likely.

      I think your best option is to wait and see if the government releases a plan to help underwater borrowers, as is being seriously discussed at this time. Pay attention to the news that is being reported about this issue. Bills.com will certainly write about a new program, if it is rolled out.
      1 Votes

  • 35x35
    Sep, 2011
    Angela
    We have a vacation home we bought in '09 for $38k. It was seller financed and we need to refinance/pay off before 5 years. How do I go about refinancing a vacation home. We bought it in '09 for $38 w/ a 5year ARM at 7%. The house is valued at $70k now.
    0 Votes

    • 35x35
      Sep, 2011
      Bill
      The problem I see is locating a lender who is willing to make a small mortgage loan. Contact a bank or credit union that is local to the vacation home as a starting point.
      0 Votes

  • 35x35
    Jul, 2011
    John Hoots - Chicago mortgage loans expert
    Sometimes you just do what you got to do and refinace. If it has to make you go for refinancing your mortgage, then so be it. It may look unfair but as long as you find it beneficial to you, you just got to refinance.
    0 Votes

  • 35x35
    Feb, 2011
    Nancy
    What kind of costs should I expect, when taking out a HELOC? I love your Web site!
    0 Votes

    • 35x35
      Feb, 2011
      Bill
      When shopping for a HELOC, after determining that it is the right home refinance option for you, there are various costs you can expect. Some of them are the same as the fees that you pay when you take out a purchase mortgage or a standard home refinance mortgage. Your expected costs include:
      1. An appraisal fee for a property appraisal. Your lender will likely want a full, official appraisal from a licensed appraiser which estimates the value of your home. If you are in a very strong equity position, the lender may not require an appraisal or may approve a cheaper version, called a "drive-by" appraisal.
      2. Third-party closing costs. These can be a variety of costs, such as title search fees, document preparation and filing fees, and attorney's fees.
      3. An application fee. Find out if this fee is refundable, if your application is turned down.
      4. You may be responsible for certain fees that occur during the plan. Find out if your lender charges yearly membership or maintenance fees.
      5. Some HELOCs charge a fee, every time you make a transaction that draws on your line of credit.

      As with any financial product, shop around to find the best deal for your home refinance needs.

      2 Votes

    • 35x35
      Apr, 2011
      harry
      This is great help. I assume that these HELOC tips apply to a home refinance mortgage loan too? Thanks for helping people like us.
      0 Votes

    • 35x35
      Apr, 2011
      Bill
      A first mortgage, second mortgage, or home equity line of credit follow the same qualification rules. What is true for a HELOC qualification is true for a refinance.
      0 Votes

  • 35x35
    Feb, 2011
    Harold
    I have quite a bit of equity in my home, although a lot less than there used to be. Does it make sense to do a cash-out refinance, in order to pay for some home improvement projects I would like to undertake?
    0 Votes

    • 35x35
      Feb, 2011
      Bill
      Refinancing your home may indeed be the cheapest way to finance the home improvement projects. There is probably no cheaper way to borrow a large amount of money than refinancing using the equity in your home.

      You did not include enough information about your overall finances for me to say whether refinancing is your best option. Do you have any other way to pay for the home improvement projects? How affordable will your new mortgage payment be, if you take out all the cash you need to pay for your projects by refinancing?

      I suggest that you speak with one of bills.com home loan mortgage lending partners, to see what kind of loan you qualify for today.

      If you want to discuss your situation in detail, please call one of my Money Coaches at 888-849-0170.
      0 Votes

  • 35x35
    Feb, 2011
    Jody
    Thanks, Mr. Ewing. The video was very helpful in explaining what I should be thinking about when debating whether or not to refinance my mortgage.
    0 Votes

  • 35x35
    Feb, 2011
    Fernando
    I want to do a home refinance, but was told my credit score is just a fraction lower than I need it to be to qualify for the loan. Is there a way to quickly improve my credit score?
    0 Votes

  • 35x35
    Feb, 2011
    John
    I've spent a lot of time on line looking for a home refinance loan to pay off some debt and consolidate. I've been strung along and cut loose too many times. If a home refinance is out, what are the other options to consolidate debt?
    0 Votes

    • 35x35
      Feb, 2011
      Bill
      John, what is causing you to be turned down for a refinance loan? If you know why you can't get a loan, maybe you can focus on changing something that will allow you to qualify for the loan, such as improving your credit score.

      Separately, you should look into a debt settlement program and a credit counseling program. In a Credit Card Counseling program, your credit card issuers agree to lower your interest rate in exchange for the promise of repaying the entire balance in five years.

      In a debt settlement program, you choose to cease making monthly payments to your unsecured creditors, instead placing funds each month in a special account that stays under your control. Your settlement program negotiates reduced pay-offs with your creditors and the funds in your special purpose account are used to pay the settlements.

      I recommend that you visit the bills.com savings center. There, you can get free consultations and debt relief quotes to see what your options are and how much you could save from one of Bills.com's pre-screened debt relief providers.
      0 Votes

  • 35x35
    Feb, 2011
    Louise
    My parents have been thinking about how home refinance might benefit them. They don't qualify for a reverse mortgage yet, but are both semi-retired and are having difficulty making ends meet. The Bills.com mortgage calculator was really helpful with determining if refinancing was the best alternative!
    0 Votes

  • 35x35
    Feb, 2011
    Di
    I am considering the option of home refinance and your mortgage calculator tool was straightforward and easy to use. I appreciate that this is a tool I can easily access.
    0 Votes

    • 35x35
      Feb, 2011
      Bill
      That's great DiVa, we're glad that you are making a smart decision on your home refinance. Just be careful on second home investment properties, they can get you into trouble!
      0 Votes

  • 35x35
    Feb, 2011
    Julia
    What a great informational site for home-refinance. My daughter let me know about this site and it answered my questions. Thanks Bills.com!!
    1 Votes

    • 35x35
      Feb, 2011
      Sandra
      I'm going to go through the home refinance process right now, to try to get a lower rate and maybe even do a 15 year mortgage loan to pay off my loan faster. I will let you know how it goes, but thanks for the refinance tips.
      0 Votes

  • 35x35
    Feb, 2011
    Jeff
    Great advice. I've been sifting though a bunch of information relating to my home refinance and this site was just what I was looking for. Bills you are on the mark!
    0 Votes

  • 35x35
    Feb, 2011
    Benjamin
    There are a ton of sites out there dealing with the question a home refinance... this is the best I have found. It lays out the options clearly and succinctly!
    2 Votes

  • 35x35
    Feb, 2011
    Noah
    Oh man! that mortgage calculator was very useful when i was trying to figure out if I could get a refinance loan. glad I found this site!
    1 Votes

  • 35x35
    Feb, 2011
    Jon
    I always thought home refinance simply meant getting a new mortgage. Thank you for the useful information on the other options of cash-out refinance and home equity line of credit (HELOC).
    1 Votes

  • 35x35
    Feb, 2011
    Elijah
    The mortgage calculator is great. I like how it does not ask for any personal info just to get a good idea of where you stand.
    0 Votes

  • 35x35
    Feb, 2011
    Dexter
    This is gives me better insight as to how to think refinancing my home for the first time. Thanks for the good article Bills!
    0 Votes

  • 35x35
    Feb, 2011
    Jon
    What risks do I take on with a home refinance? Does it make it easier for the bank to come after me if I get into trouble with payments?
    0 Votes

    • 35x35
      Feb, 2011
      Bill
      For people residing in most states, the answer to your question is "no." The language in your original mortgage or deed of trust may not be word-for-word identical to your refinanced mortgage or deed of trust, but the rights of both parties are fundamentally the same for everyone: If a homeowner does not make the monthly payments, the lender has the right to foreclose.

      However, if you are a California resident, or a resident in a state like California that protects homeowners with anti-deficiency laws, then refinancing an original mortgage, which is called a purchase money loan, removes the anti-deficiency protection. However, each state with an anti-deficiency rule adds their own twist, and in some states refinancing does not change a homeowner's rights, and in others, like California, refinancing changes a homeowner's rights.

      Consult with a lawyer in your state who has experience in property law to learn if your state offers an anti-deficiency law, and if so, how refinancing changes your rights.
      1 Votes

  • 35x35
    Feb, 2011
    Tudor
    Thanks for the helpful information on home refinance and the many options available.
    0 Votes

  • 35x35
    Feb, 2011
    Terrence
    We're considering a refinance to reduce our term and payoff our loan more quickly. Are there any tools on the site that can help us find rate quotes and loan offers from specific lenders, for which we actually qualify? Thanks for the other information... very helpful in helping us to make a decision, and any tips on helping us find the right loan and lender would be great.
    0 Votes

    • 35x35
      Feb, 2011
      Bill
      Yes! Please see the innovative Bills.com Mortgage Refinance Calculator. Our calculator allows you to enter your existing loan information, and then displays a graphical amortization schedule that shows you the total cost of your existing loan. Our calculator then displays the refinance rates available to you today, and the lifetime cost savings you will see if you refinance.

      Our refinance calculator will tell you in a few minutes what just a few years ago would have taken at least a day, several phone calls to brokers, and a graphing calculator to learn.
      1 Votes

  • 35x35
    Feb, 2011
    Soundarya
    This is a one-stop shop for exploring all options related to home refinance!!. Thank you very much for posting the tips.
    1 Votes

  • 35x35
    Feb, 2011
    Mark
    I had no idea that your company had the expertise in mortgages, tax, and even helpful suggestions on my credit card debt. I am telling all my friends about your complete services...thank you!
    0 Votes

  • 35x35
    Feb, 2011
    Gary
    it is soo confusing to know which way to go with such things as refinancing. I am thrilled that you provide such an informative source for my research. Thank you!!
    0 Votes

  • 35x35
    Feb, 2011
    Jan
    The home refinance information I found was very helpful, thank you for making it easier for me to get the answers I needed for my situation in one place!
    0 Votes

  • 35x35
    Feb, 2011
    Stephanie
    Your website offers some really good info on mortgages. I got my home refinance question answered right away!
    1 Votes

  • 35x35
    Feb, 2011
    Jeremy
    The home refinance market is more complicated than ever before. (Or at least that's what it seems like to me) Thank you for including this home refinance info to make it easier. This website is super helpful - I just bookmarked it for later...
    0 Votes

  • 35x35
    Feb, 2011
    Elly
    Your information is very useful. Thank you.
    2 Votes

  • 35x35
    Feb, 2011
    Lucy
    Thanks for the helpful home refinance information. I really appreciate the tips and I will check out the mortgage calculator.
    4 Votes