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I currently have a mortgage with a rate of 7.5%. I owe 126300 on the mortgage. I just had an appraisal done and the property should value around $200,000. I have a few options. I have been quoted a rate of 6.875 with no points on a refinance and a rate of 5.99% on a home equity line of credit. I originally bought the home for 177,000 and put 50,000 done and paid 2 points to get 7.5%. I want to get my hands on 30,000 to do some upgrades on the home and purchase a new vehicle. I can take out a refinance on 160,000 and raise my mortgage payment by around 150 dollars a month or I can refince the balance of my mortgage which would drop my payment by 50 dollars and then take out the equity line of credit which when maxxed out would give me apayment of around 185. Any input on what would be the best route to take???

Greetings pbjthomas,

Personally, I'd compare the cost of the refi vs. the home equity loan. By that, I mean compare the bottom line payment, and total interest that you'll have to pay over the life of the loan. Once you see the numbers in black and white, it can make the decision a little easier.

You might also consider visiting our Home Center. It offers Foolish guidance on almost everything you need to know about buying and owning a home, including obtaining your credit report, mortgage rates, and financing options. In addition, there is a discussion board where you can compare notes with others and get advice from experts.

Good luck! Fool on!

Karen Kosoy
TMF Karen

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