Refinancing second mortgage, also called a home equity loan, often has a much higher interest rate than a first mortgage. This is because the second mortgage isn’t repaid until the first mortgage is repaid if you default. The additional interest is a form of protection for your secondary lender.

Timing the refinancing second mortgage is just as important as finding low rates and fees. Before you decide to refinance, make sure that you have a clear benefit. Lower rates can equal savings if you have enough time to recoup any closing costs or other fees. In most instances, a point drop of two percent or more with seven years left on the loan makes it cost efficient to refinance second mortgage.

If you’ve accrued additional equity and your credit has improved, but you don’t want to refinance your first mortgage, refinancing second mortgage alone may be an option for you. If your current lender won’t refinance and you don’t have a pre-payment penalty, you should be able to find a new lender offering lower rates.

Refinancing for a fixed rate home equity loan will provide you with the security of a regular payment schedule. In some cases, you may also find a lower fixed rate than your current adjustable rate. To see if you have a clear benefit to refinancing, start looking at loan quotes. Figure the potential costs of interest and fees, and compare them to your current refinancing second mortgage. Factor in your future financial goals, and you will have a good idea if refinancing is for you.

Read more about bad credit mortgage refinancing and Refinance Second mortgage.

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