Your Home Equity loan may stop your refi.

Before the bubble burst it was routine for holders of home equity loans to sign off when borrowers wanted to refinance their first mortgage. Since the home equity loan, or line of credit, is a second mortgage, they have to agree to continue that secondary status when you change lenders or terms.

Now home equity lenders, faced with increasing defaults of outstanding loans, are balking at approving any change to the primary mortgage. One lender no longer approves any changes to the first mortgage if the new lender is being brought in by a mortgage broker.

Other reasons for turning down refinancing of the first mortgage include changes in your credit rating, failure to meet new standards (if they would not grant you the home equity loan under current standards they will not approve change of first mortgage), and declines in your property value.

Do you know the mortgage basics? Mortgage types, terms and interest rates will make a difference on how much you end up paying.

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