How to Refinance a Home Equity Loan to Get a Lower Interest Rate
Home equity loans allow you to borrow or take money from the equity in your home and then use this money for multiple purposes such as debt elimination and home repairs. The interest on home equity loans are normally much lower than credit cards. However, the rate you receive on these loans affects your monthly payment. In order to lower your payment, you'll need to refinance the home equity loan and qualify for a lower rate.
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Instructions
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Order your credit report. Check your credit report to assess your rating from AnnualCreditreport.com. Applicants with high scores qualify for the lowest rates on home equity loans.
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Fix your credit. Take steps to improve your credit rating. Pay down outstanding debts, don't skip payments and avoid numerous credit inquiries.
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Gather your income statements. A refinance involves applying for an entirely new home equity loan. Lenders will request copies of your income statements such as paycheck stubs or tax returns. Have these documents on-hand for review.
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Contact your present lender. Obtain a home equity quote from your existing lender. Due to your history, they may offer the best loan rate in order to retain your business.
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Consider other lenders. Along with requesting a loan quote from your present lender, contact two or three additional lenders to obtain a no-obligation quote.
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Make comparisons. Once you have all your loan quotes in-hand, make a side-by-side comparison to see which lender offers the lowest interest rate. Choose a home equity loan, and then contact the lender to begin the refinance process.
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Tips & Warnings
Refinancing a home equity loan involves paying out-of-pocket expenses such as an application fee, closing costs and a home appraisal.
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