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Home Equity or Refinancing
Is there an advantage of a home equity loan over refinancing?
Home equity loans are issued by banks and the lending standards are much more difficult. Most banks do not approve home equity loans unless the mortgage loan borrower has credit scores of 700 FICO or higher. A home equity loan is a second mortgage and most home equity loans are amortized for 10, 15, or 20 years whereas on a cash out refinance mortgage it is amortized over 30 years. An advantage of home equity loans over a cash out refinance mortgage is that you can get up to 90% to 100% cumulative loan to value ( CLTV ) versus on a cash out refinance, your loan to value is restricted to 80% loan to value on a conventional loan and 85% on a FHA loan.


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