Home Equity Refinancing

Here's what you need to know about refinancing your home equity loan

If you have an existing home equity loan and you need to fund a new project, would like to take advantage of lower interest rates or even would like to change payoff terms, you can create flexibility through home equity refinancing. You might even consider refinancing into a home equity line of credit.

Reasons to refinance your home equity loan

Many factors change in the years after you take out your original home equity loan, and many of them are a good cause to consider home equity refinancing. Refinancing your home equity loan can help you:

  • Reduce your monthly payment
  • Lock in a lower interest rate
  • Switch from an adjustable rate to a fixed rate for more stability or vice versa to realize the advantages of an adjustable rate
  • Borrow additional funds for a new project
  • Shorten or extend payoff terms

Before refinancing your home equity loan

Once you have determined that you could benefit from home equity refinancing, there are some preliminary steps you can take to make sure that you are getting the most from your new loan.

  • Calculate how much equity is currently available to borrow against. Using the loan-to-value ratio, you can gain insight into the equity on your property. Don't forget to subtract the amount of your existing home equity loan from the value.
  • If you are looking to borrow additional money, establish your borrowing needs. How much additional cash flow do you need to accomplish your goals? Make sure there is enough equity in your home to cover the additional borrowing.
  • Realistically set payment goals. You are taking out a completely new loan. This means that you will be resetting the payment terms and the number of monthly payments you will be making. Choose a loan that works best with your current financial situation and needs. Remember interest rates are typically lower on shorter term loans. Take that into consideration when selecting a new home equity loan.
  • If you are refinancing to lower your payments, do the math. Remember, when you refinance a home equity loan, you may have to pay closing costs and other fees. Determine how many months it will take you to cover the fees. It's not worth refinancing your home equity loan if your fees negate your monthly savings.
  • Consider your current situation. A lot may have changed since you originally took out your home equity loan. Before you apply, compare your credit score then with your credit score now. If it has been negatively affected since you took out your original loan, it could impact your borrowing options.

Refinance your home equity loan with Citizens Bank

The best time to refinance your home equity loan is determined entirely by your individual goals. Many people choose a home equity refinance when interest rates drop significantly or they are beginning a large project, but there are a variety conditions factoring into each refinance.


If you would like help determining when home equity refinancing is right, speak to a Citizens Bank Home Loan Originator. You can start the home equity application process by answering a few questions online and a Home Loan Originator will contact you to complete your application and discuss the next steps in the process.


If a home equity line of credit is right for your borrowing needs, you can complete the HELOC application online.