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Home >> Lending >> Home Mortgage
Refinancing Takes Equity: What Happens to Home?
I owe the bank nearly $200,000 in equity loans and personal loans. They want me to re-finance again, but won't I lose my home since this is the remaining equity?
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 If you refinance you may get a lower interest rate, but you need to look at whatever fees you will be charged to refinance. If you are paying your existing loans as the payments are coming due, you have no obligation to refinance. If you have equity in your home and you take existing loans on the home and refinance them and also add this other debt, yes, you will have less equity. This is because your home has the same value, but you increased the debt that is against it.
You should look at all your debt as it is, what your monthly cost is to make those payments, what the interest is on those loans, and compare it to the same numbers if you refinanced and added to the loan. This is a consolidation loan and you can then see which is best for you.
If any of your loans are balloon payments and the balloon (a large payment at the end) is coming due, you may not have a lot of choice if you can't find another lender or the current lender won't refinance that loan individually. If you do refinance, compare your current lenders offer against others to ensure you get the best deal.
Published on BankingQuestions.com 1/30/09
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