Should You Refinance or Get a Home Equity Line of Credit?

When you own a home, you instantly have options. Those include what colors to paint the walls, whether or not to put in a deck, and how to access the equity in that home. When it comes to equity, two of the best choices are a cash-out Refinance Loan or a Home Equity Line of Credit. Both have their advantages, and one may be right for you.

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What is a Cash-Out Refinance Loan?

Refinancing your current loan means getting a new loan that incorporates what you have left to pay on your current loan. Often times, this can mean lower monthly payments because your loan amount is less and your interest rate may be lower. But there’s an added bonus to a refinance loan, and that is the option to add the equity in your home to your new refinance loan — also called a cash-out refinance. You might not see a lot of savings on your current monthly payment, but you will get a new home loan the covers what you still owe plus a certain percentage of your available equity. In addition, the interest paid on the new loan, Including the cash, could be tax-deductible.

Options include: 7/1 and a 10/1 ARM, and 15/15 ARM amortized over 30 years.

Time to Refinance: 30 days on average

What is a Home Equity Line of Credit?

If you’ve lived in your home for a few years, or if you live in a community where home prices have risen quickly, you could have some equity. Not sure? To calculate yours, subtract what you still owe on your loan from the current value of the property. If you come up with a positive number, you may have some equity. And those funds could be used to do a remodel, pay off debts, and a lot more. Our Home Equity Line of Credit keeps your monthly payments affordable with a 10-year interest-only draw period and 15 years principal and interest amortized over 25 years. Plus, you’ll pay less with reduced closing costs.

Options include: No application fees, no annual fees, and the option to pay down the principal without penalty.

Time to complete: 21 days on average

Talk one-on-one with our mortgage team about your equity options and which one is right for you.