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Refinance Loans

Refinance To Build Equity Faster

Many borrowers use a refinance to either shorten the term of the mortgage or to reduce the monthly payment. And beware, even if you lower the rates, a shorter term means a higher monthly payment. The benefit is that you'll build up equity faster and pay far less in total interest over remaining life of the loan.

If you can't afford the increased payments on a 15-year mortgage, your next best means of building equity is to refinance for less than 30 years. To do so, ask your mortgage company to customize your new loan's term to match the years that are left on your old loan -- if you are five years into a 30-year mortgage, for example, ask for a 25-year loan.

Refinancing without changing the term of the mortgage can still save you in payments each month provided the interest rates you receive are lower than the original rates.

Cash Out Refinance — Free up Some Cash

Another way to make a refinance work for you is to refinance for more than the balance remaining on your old mortgage -- in effect, tapping your home equity, or "cashing out," in mortgage speak. Thanks to favorable rates, you may be able to do so without boosting your monthly outlay. For example, at 8.5%, the payment on a $200,000, 30-year fixed rate mortgage is $1,538. But at

Second Mortgage Loan Home Equity Loan

A second mortgage also known as a home equity loan can be a great way to borrow money when you are in need. Unlike a regular mortgage, a second mortgage does not have priority on your home if you default on the loan. Your first mortgage would be repaid by your home's value before any funds go towards paying off the second mortgage. Second mortgage loans are most appropriate in situations where you require a large sum of money. Three common issues that may warrant a second mortgage are large home improvement projects, college tuition and also debt consolidation. While it may be tempting to take out a second mortgage in order to get money, remember, the amount you will need to pay each month will increase with the new payment being in addition to the original mortgage payment. Also, if you fail to adhere to the payment schedule, you could end up losing your home.

Second Mortgage Interest rates and Fees

Typically, second mortgages come with higher interest rates than a first mortgage. This is because that in the event of a default, the second mortgage will not receive payment from the home's value until the first mortgage is paid off. This makes a second mortgage slightly more risky for a lender. Also, there are high second mortgage fees associated with the application for a second mortgage loan. Sometimes, these fees may discourage you from taking out a second mortgage depending upon how much money you need and for what purpose you need it.