What is home equity loan refinancing?

Home equity loan refinancing means paying off an existing mortgage with the proceeds from a new loan, using the same property as collateral. It is a second mortgage.

It is important to note that you may be subject to the same costs you paid to get your original mortgage, including settlement costs, discount points and other fees. A prepayment penalty may apply for paying off the original mortgage early.

The amount you save will vary depending upon factors such as interest rates, refinancing costs and tax consequences. Borrowers may have the option to refinance from an adjustable rate mortgage with a high interest rate subject to increases to a lower fixed-rate mortgage.