With a $75,000 home equity loan, you may receive a higher rate, but it applies to a much smaller loan amount. If you secured a home equity loan at 9.0 percent APR, your monthly payment for your mortgage and equity loan combined would be slightly higher at $1,559. However, the term of your equity loan is 15 years, and your mortgage is still on track to being paid off in 24 years. In all, your total interest payments come to $174,238 (original mortgage plus home equity loan).
Bottom line: In this scenario, a home equity loan comes out as the better financial decision, because not only are you finished paying six years earlier, you would save $112,987 in interest alone.
Another upside to using solutions other than cash-out refis is that there are now convenient and fast solutions that let borrowers access their equity with ease. Figure Home Equity Loans PLUS lets borrowers apply for a loan online and get notified of approval in five minutes. Upon approval, funds can be deposited in the bank account of choice in as little as five days*. With loan terms of 5, 7, 10 and 15 years at a fixed rate, you can get the cash you need with a payment that fits your budget.
If you’re looking to access the equity in your house to help you complete a home improvement project or consolidate your bills, taking time to know your options can potentially save you thousands of dollars. Figure has built a calculator to show how much you could save using a Home Equity Loan PLUS instead of a cash-out refi. Calculate your potential costs and savings at Figure.com/cashout.
*Approval in 5 minutes and funding in 5 days is based on a typical customer experience for properties located in counties that permit e-signatures and e-recording. Actual funding times may vary. Due to state law, funding in 5 days is not applicable to first lien loans secured by owner-occupied properties in Vermont.