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Refinancing house mortgage loan is a common practice today; it is even a better option in case of urgent cash requirement such as medical emergency or educational fees. Refinancing can help you alter your mortgage payments so that with the same amount of earning, you can pay off low monthly mortgage payment. It is however advisable to properly weigh the gains and losses while going for refinancing house mortgage loans. I have discussed common types of refinancing options available with their benefits and shortcomings

Debt Consolidation refinancing:

If you are in a serious debt which is costing you more than the home mortgage debt, the best option available to you is to refinance your home mortgage by debt consolidation. This will decrease the monthly amount to be paid and will help you save money in hand for other emergency expenses. The major drawback of this loan is that since you are aware that the monthly payment is low, you tend to become lenient with your expenses leaving an open chance to again getting you trapped in loan cycle.

Home Equity refinancing:

Home Equity refinancing loan is available by making use of equity of the house; the loan will be available on the amount which is not owned by you. For example if the total cost of your house is $300,000 and you owe $100,000 cost of the house, the refinancing will be carried out on $300,000 minus $100, 000= $200,000 to meet your emergency cash needs. The short coming is that you if you are not able to repay this loan, serious consequences such foreclosure of your home can be faced.  Also it is advisable to get the proper estimate of your property and the real estate process in your area before availing this type of services in order to ensure that you are not under any kind of loss.

Extreme vigilance and carefulness is advised while availing for any of the home mortgage refinancing options.

A Home Equity Loan, which is also abbreviated as HEL, is a type of loan in which a borrower uses equity in their home as a collateral. HEL is generally availed for the expenses such as home renovations, schooling, paying off other debts, medical bills or college education. Home Equity loan is also known as second mortgage since it is secured against the value of property.

The primary features of Home Equity Loans are as follows:

• Home Equity Loans are approved faster since you use your home as a collateral and the lender can get control of your home if you fail to pay off the debt.
• Home Equity loans have fixed rate of interest.
• The monthly instalments to be paid in Home Equity Loans are less as compared to the primary mortgage.
• The interest amount is tax deductible.

One should be aware while going for Home Equity Loan is that HEL is not a free money and its home which is backing the loan, it is therefore suggested to use HEL very wisely. Try and avoid any missed payments as it may increase the chances for lender to take possession of your home.

HEL has fixed interest rates and therefore you will receive a lumpsum amount of money, it is therefore suggested to use home equity loan for the one shot expenses such as buying a car, home repair etc.

The loan amount you can apply for largely depends upon the factors such as income, debts, the value of your home, how much you still owe on your mortgage and your credit history.