Dean Tucker and Shanna Wroten-Tucker of Waterstone Mortgage Prime Equity Group of Boise Idaho discusses best home refinance and buy business practices and their award BBB Integrity Counts award philosophy.

If the words “refinance home equity” and “mortgage refinance” seem very weird for you, here are a few things you should find out in order to shed some light on this field.

The first thing you need to know is the reason for needing refinancing. Either one wants to reduce the monthly payments or to tap built-up home equity, refinancing is the key solution to your problems. Other people might want to consolidate outstanding debt, which means combining a first and second mortgage into a new first mortgage. Last, but not least, a very large number of people simply want to give up a mortgage product which is too expensive for their incomes.

There are a few common rules that any person should consider before getting into such a business. Well, the most traditional rule of a mortgage refinance is getting an interest rate at least 2% below the interest rate you are paying at that certain moment. The terrible thing about this rule is that this two percent difference from your rate can cost you even more, as these low rates usually don’t come up that often. Therefore, the best thought behind getting a more suitable mortgage refinance is taking the time and properly analyzing the time and the cost factors.

The central point of interest when investigating a mortgage refinance option is the amount of money that you will need to borrow. The most common practice of the lenders is allowing you to borrow an amount of up to 80% of the current value of your home. Of course, there are lenders who let you lend more money, that is in case you simply want a refinance for your existing loan.

For those of you who want to free up cash in your home, the only way of avoiding a mortgage refinance is choosing a refinance home equity loan. Home equity loans also have their own set of risks. The fact is that all refinance home equity loans provide adjustable rates. They are very similar to the way a credit card works.

You will have to consider the fact that the lenders will generally offer you not more than 75% of the equity in your home. Of course, lenders also offer refinance home equity loans having a fixed rate, but the main thought is that they work much like a first or second mortgage on your home.

Therefore, you must be very careful when taking such a choice!

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There are some certain benefits to doing a cash out refinance. Just make sure that overall you are not going to be spending more money in fees and interest doing a cash out refinance as opposed to a home equity loan. When you do a cash out refinance, you are refinancing your entire loan. Let’s say you owe $300,000 on your home and you want to get $10,000 in cash out. If in refinancing your rate will be the same or higher, then you will be losing an extraordinary amount of money in fees just to get a $10,000 loan. In a case like that, you would certainly want to go with a home equity loan.

Home equity loans are better if:

1. You have a large home loan yet only need to cash out of a small amount of equity 2. You need to borrow up to 100% of the equity in your home 3. You want a revolving credit line 4. You want a payoff sooner, or longer than the term of the rest of your mortgage loan

On the other hand if you are:

1. Going to refinance anyway 2. Wanting to borrow a large percentage of your home’s equity 3. Refinancing for a much lower rate

Then, a cash out refinance loan may be best for you. Of course, the best way to tell is to really sit down and do the math. These are just guidelines; the real test is in the math. You can consult a refinance calculator and a home equity loan calculator and figure out which one will save you the most money in the long run. Compare the total amounts you will spend in interest and fees. If you are plotting on a cash out refinance, make sure that you are refinancing with a low enough rate to justify the fees to refinance. Your loan specialist should be able to help you figure out which one is best for your needs.

For a list of recommended Refinance Lenders or if you want to use a mortgage calculator to help you compare a home equity or refinance loan for your cash needs, click here: www.abcloanguide.com/refinance.shtml

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