Which Is Better – Home Equity Loan Or A No Cash Out Refinance?
No Cash Out Refinance loans and home equity loans are a viable option for a homeowner who needs extra money for emergency bills, home repairs, or any number of expenses. A person considering taking out any form of home refinancing may wonder if one loan type works better than the other.
If a home owner needs a small amount of money for repairs, furniture or an unexpected emergency bill, the no cash out refinance is the best option for him. Home equity loans work better when a person needs more than a limited amount of cash. Unlike no cash out refinance loans, there is no limit to how much a person can borrow.
When Should I Go With A Cash Out Refinance?
A homeowner can only take out a maximum of 2% of the value of the equity has built up on his home of $2,000. Whichever amount is lesser sets the limit for a person can borrow. Before a person can qualify for this type of loan he must have built up additional equity in his home. If the value of the home has caused it to be the amount of the original loan, he cannot take out a cash out refinance or even a home equity loan.
When To Go For a Home Equity Loan Over a No-Cash Out Refinance
Home equity loans work best when a person needs additional money for things such as college educations, far more expensive repairs, or emergency medical bills. The rules about when a person qualifies for either type are the same.
When a home owner needs more than $2000 or 2 percent of his home value, home equity loans may be the only option for large amounts of additional cash that a person needs. The application process still determines whether or not a person can get a loan.
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