How Will You Repay Your Home Equity Line of Credit?

by Joe Taylor Jr.
CMR Columnist

A few years ago, mortgage holders flocked to low interest home equity lines of credit to finance everything from home renovations to vacations. With mortgage rates rising and energy prices skyrocketing, some homeowners may need an escape route. Fortunately, refinancing offers you the ability to roll a HELOC into a fixed loan with a lower rate.

Unlike fixed rate mortgages, home equity lines of credit rise and fall with the market. Refinancing your mortgage and your HELOC allows you to lock in a fixed interest rate for a period from ten to fifty years. Analysts expect mortgage rates to keep rising, so don't hold off because you hope rates might return to the record lows of a few years ago. The sooner you complete your mortgage refinance, the more money you'll save in the long run.

Finding Refinancing for HELOCs

Start with the bank that offered you the HELOC in the first place. Most lenders will be happy to help you with a mortgage refinance, especially if it means they can win your primary mortgage business away from another lender -- plenty of mortgage lenders still want your business, even if you have bad credit.

If you have been putting off your mortgage refinance because of a few dings on your credit report, acting sooner can actually help you get a better deal. If you have been late making payments on either your mortgage or your home equity line of credit, a mortgage refinance can actually help you raise your credit score faster. Refinancing often results in a lower overall monthly payment, with less risk that you'll cause multiple late payments to appear on your report.

Sources
Daily News Transcript
Seattle Post-Intelligencer
Times Dispatch

About the Author
Joe Taylor Jr. coaches musicians, entrepreneurs, and other adults that want to shift their careers. He holds a Bachelor of Science in Communications from Ithaca College.

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