Entertainment Magazine: Arizona: Finance

Arizona Refinance Home Loan Options

Tapping Into Arizona’s Home Equity or Refinancing Markets

By Allison Beatty

Arizona’s strong housing market has produced record appreciation in recent years.

Even in years when the market shifts downward, Arizona homeowners often retain strong home values.

This stable market makes it advantageous for homeowners who want to refinance or take out a home equity loan, as they can feel comfortable using their homes as a financing tool.

A home equity loan is, in essence, a second mortgage on a home. The mortgage lender determines the equity in a home by subtracting the mortgage balance from the home’s estimated value. Lenders often allow a homeowner to borrow about 85 percent of the equity.

For example, if a homeowner has $100,000 in equity and wants to remodel a kitchen or do a room addition, he or she could tap into as much as $85,000 for the project. The loan often is for four years, requiring the homeowner to make equal monthly payments during that time.

There are some cases, however, when a mortgage refinancing makes more sense. If a homeowner has an older mortgage with a higher interest rate than current rates, it can be beneficial to refinance to lock in a lower rate. Refinancing also allows a homeowner to take cash out or consolidate a few loans into one.

Homeowners who are considering one of these two financing vehicles should talk with Arizona mortgage lenders and learn details of specific loans. They also should weigh the current interest rate climate to determine if a refinancing or home equity loan is the best route to take.

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