Can You Refinance a Home Equity Loan Into a Mortgage?

If you’re currently in the process of paying off your primary mortgage as well as your home equity loan, then the last thing you want to think about is trying to juggle two separate mortgage payments each month. The best news is, however, that you can make your financial situation much easier by rolling your home equity loan into your primary mortgage. If you’re confused about home loans and South Carolina FHA loans, allow us to help at BrickWood Mortgage. 

The solution you seek is known as a cash-out refinancing, and by using this option, you can roll both of your loans into one loan with just one payment each month.

What is the Difference Between Home Equity Loan and Primary Mortgage? 

Your primary mortgage is the loan that you took out when you first bought your house. Your home equity loan is a loan that you can take out based upon the equity you’ve built up over the years. The difference between these two loans is that, whereas your primary mortgage is the loan you took out when you first bought your house, your home equity loan is a secondary loan that you can take out based upon the equity you’ve built up over the years. 

By rolling these two loans into one, we can make your financial situation much easier. For some homeowners, looking to refinance equity loan balances along with their primary mortgage can simplify things. We can then determine if this is a smart financial move for you based upon your own financial needs.

Why Should I Consider Refinancing My Home Equity Loan?

One of the best reasons why you should think about refinancing your home equity loan is because, by doing this, you’ll essentially be consolidating all of your debt into a single payment. Many homeowners ask, can you refinance a home equity loan into a mortgage? The answer is yes, and this means that you’ll never have to worry about making several payments. Additionally, if you can manage to get a lower interest rate with your current interest rates, then you can save even more money.

Do You Qualify?

In order to qualify for a refinancing, there are a number of different things that need to be taken into consideration, such as your credit, your debt, as well as your equity. For many homeowners, the goal is to consolidate mortgage and home equity loan payments into one, making monthly budgeting easier.

To qualify, your credit generally needs to be at least 620, but if your credit is over 740, then you can get the best interest rate. When it comes to your debt, your debt needs to make up less than 43% of your gross income. We can help you think about all of these different things and determine if refinancing is right for you.

What Are the Costs and Risks?

Refinancing comes with a number of different costs, and these costs can really add up. The costs of refinancing your mortgage can range anywhere from 2% to 5% of your loan, and you’ll need to get an appraisal done in order to find out what your house is worth. This means that, if your house has depreciated, then you probably don’t want to bother with refinancing your house. 

Additionally, if you extend your debt, then you could save money, but you could end up losing more. Understanding the benefits and risks of home equity loan refinancing is essential before making a final decision.

Refinancing your home equity loan with your current mortgage can prove to be a shrewd financial decision, though it is not for everyone. We are here to guide you in making an informed decision with clarity and confidence. Contact us today, and then we can discuss the options, and then we can determine if it is right for you!