Refi or Home Equity?

Here are the questions you can ask to decide whether to refinance your first mortgage or take a home equity loan.

How much equity do you have?
Before you decide which type of loan, you’ll need to ensure you have enough equity to absorb more debt. Most lenders will require that you borrow no more than 80% or 90% of the value of your home.

At Saratoga’s Credit Union, we can help you go further by borrowing up tp 100% of your home’s value. This means access to more of your equity to help with all of your needs.

How much money do you need?
If you need a modest amount, for example, to replace your deck or perform small repairs, a home equity loan may be the best option. You can borrow on a shorter term and pay those repairs off quickly.

If you have a large remodel, such as a kitchen or bathroom, or project, you may need to borrow a larger amount. In this case, refinancing your mortgage can be a good choice because the payments will be spread over a long timeline so they don’t cause financial distress in the short term.

How much can you pay in closing costs?
A mortgage may require more costly appraisals and fees than a home equity loan, so if closing costs are an issue, consider a home equity loan. However, many refinances involve rolling the closing costs into the loan, so the out-of-pocket costs may be minimal.

What is your mortgage rate?
If current mortgage rates are considerably lower than what you’re currently paying, a refinance will likely be the best choice for you. You’ll save money on monthly payments — and more of your monthly payment will go toward paying off your loan rather than covering interest costs.

What are your other needs for funding?
If you need cash for other costs in addition to your home repairs or improvements, a mortgage refinance might be necessary to preserve your ability to deduct the mortgage interest. (Always consult your tax adviser for advice specific to your tax situation.)

No matter what type of home loan you need, contact our lending team at 518.583.2323 to get started. We’ll help you fund your home repairs and improvements!