Home equity cashout loan rates [2008-10-31]

A Home Equity Lone of Credit is same as a credit card. You can have a loan of money up to your credit limit, and you get charged interest on the portion that you borrow. You can pay down the balance, and then reuse the credit. You may also choose to refinance the Equity Line and get another 5 to 10 years to use the line of credit. However, Cash out Refinance is paying off the existing credit and acquiring a new loan.

The difference between the pay off balance and the new loan goes back to you as cash. Example, if the existing pay off balance is Rs.100, 000 and the new loan is Rs.120, 000, then Rs.20, 000 less closing cost goes to you as cash. Since rates on Home Equity Line of Credit are usually higher than the regular credit rates, one might as well consider refinancing the whole credit and pay off the first even though the loan amount of HELOC (2nd loan) is usually much smaller than the first credit.