Your home doesn't just give you shelter from the elements.

It can also buffer you from financial storms, by absorbing

the blow from unexpected events like illnesses and job

losses. Naturally, cashing out equity from your home should

be a last resort. But, when it comes time to draw on your

home's value to keep your family going, will you get better

results from a refinance or a home equity loan? Follow these

steps to figure out which option works best for you.

Think About the Long Term. Estimate how long you expect to

stay in your current house. Depending on the severity of

your situation and the real estate market at the moment, you

might even want to consider selling your home altogether

and taking on a short-term rental in your new locale. If you

expect to stay in your current home for a few more years,

the flexibility of a home equity loan may work for you.

Otherwise, a refinance can restart the clock on your fifteen

or thirty-year term.

How Much Cash Do You Need? A flexible home equity loan or

line of credit may allow you to write checks for only the

amount you need to get by. If you experienced a job loss,

you can borrow against your equity in smaller chunks and

repay your loan quickly once you get back on your feet. If

you or a family member suffered a medical emergency that

will permanently reduce your income, you may want to

refinance your house to accommodate your new budget.

Will Your Equity Drop Below Twenty Percent? In an extreme

situation, when you need to borrow so much money that your

equity will drop below twenty percent, you may have to

accept a home equity loan to prevent expensive personal

mortgage insurance from kicking in on your primary mortgage.

Can You Handle the Expenses? Refinancing may make the best

long-term sense, but your current condition may leave you

without the cash flow to accommodate fees and closing costs.

If you can find a lender who can refinance your home with no

closing costs, you may find yourself facing a higher

interest or even a prepayment penalty that locks you into

that mortgage for life. Although a short-term home equity

loan may carry a higher interest rate, you may be able to

pay it back fairly quickly and avoid some of the long-term

expenses it brings.

Earl Baker is a writer for DebtConsolidationer.com and RefinanceFinds.com.

For additional articles and an extensive resource for

everything about Debt-Consolidation and Refinance, please visit us at http://www.DebtConsolidationer.com and

http://www.RefinanceFinds.com

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