Not long ago, homeowners who had some equity often used cash-out refinances to pay for home remodeling, to consolidate debt or pay for a child’s school tuition. But that was when mortgage rates were lower. As mortgage interest rates increase, making refinancing less attractive, many are now considering getting a HELOC or a home equity loan.
First, let’s start by defining the terms.
HOME EQUITY LOAN
A home equity loan is a second mortgage for a fixed amount, at a fixed interest rate, to be repaid over a set period.