Can I Refinance A Home Equity Loan?

A home equity loan, a popular choice for many home buyers because it provides an opportunity to fund repairs, home improvements and other financial endeavors by leveraging your home’s equity, can be refinanced. While refinancing a home equity loan can offer many benefits, it’s not the best choice in every situation.

Familiarizing yourself with the process, reasons for refinancing a home equity loan, and other potential options can help you make a more informed decision.

What Is A Home Equity Loan?

A home equity loan is a sum of money secured by a homeowner’s home and is a type of second mortgage. To get a home equity loan, the homeowner applies for a set amount of funds. If the lender grants the request, the homeowner receives the approved amount as an upfront lump-sum payment with a fixed interest rate (at least typically speaking) and schedule of payments you’ll make over the life of the loan.

The loan amount is a portion of the homeowner’s equity, which is the difference between the home’s professional appraised value and the outstanding mortgage balance.