October 24, 2024

Why Refinancing Might Not Be the Best Move: Consider a HELOC or Second Loan Instead!

If you refinanced your mortgage during the low-interest-rate frenzy of 2020 or 2021, you’re probably enjoying a great rate—maybe even under 3%. With rates like that, refinancing now is likely the last thing on your mind. But if you’re carrying high-interest credit card or installment debt, it’s time to explore another option that can help: a Home Equity Line of Credit (HELOC) or a fixed-rate second loan.

Why You Shouldn’t Refinance Your First Mortgage – When you have a rock-bottom interest rate, refinancing could mean giving that up. Even if you have other financial goals, like paying down credit card balances or covering large expenses, refinancing your first mortgage might not make sense. That’s where HELOCs and second loans come in. These options allow you to keep your existing mortgage and low rate while still accessing your home’s equity.

What’s a HELOC, and How Can It Help?– A HELOC works like a credit card, but instead of drawing on a bank account, you’re using the equity in your home. HELOCs often carry low interest rates, especially when compared to credit cards or personal loans, making them a great tool for paying off high-interest debt. You can even leave the line open for future expenses, offering flexibility and peace of mind.

The Benefits of a Fixed-Rate Second Loan – For those who prefer more predictability, a fixed-rate second loan is an excellent option. It allows you to borrow a lump sum with a fixed interest rate, making your payments steady and easy to manage. At Signet Mortgage, we even offer flexible second loans that allow draws for the first three years—perfect for tackling larger debt over time.

Ready to Improve Your Financial Picture? – At Signet Mortgage, I can help you calculate the weighted average interest rate you’re currently paying and explore whether a HELOC or second loan can lower your payments and speed up your debt payoff. Best of all, you don’t have to touch your great first mortgage rate!

Let’s chat about your financial situation and see how these options can work for you. Call Clay at 925-807-1503 or visit https://www.signetmortgage.com to schedule a free consultation today!

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