Saw a stupid Facebook ad that changed my entire financial situation. One of those sponsored posts about refinancing loans. Normally I scroll right past those things but this one caught my eye because it said refinance your home equity loan today. Made me wonder – wait, can you refinance a home equity loan?
I had my home equity loan for five years at that point. Got it in 2019 for $55,000. Needed to replace the HVAC system and do some electrical work that the inspector found. The rate was 10.6% which seemed insane but the loan officer said that’s what I qualified for with my credit score at the time.
Payment was $613 a month for 10 years. Been paying it religiously every month. Never missed a payment. Never questioned if there was a better option. Just paid it and moved on.
Then that Facebook ad showed up. Clicked on it out of curiosity. The website said you could refinance home equity loans and save hundreds per month. I was skeptical. Figured it was some scam or clickbait. But it got me thinking.
Called My Sister Who’s Good With Money
My sister Amanda works as a financial advisor. Should’ve called her five years ago but whatever. Called her the next day and asked about refinancing home equity loans.
She sighed. Like that disappointed sigh when someone asks you something they should’ve known already. Asked me what my rate was. I said 10.6%. She actually said oh my god out loud.
Amanda explained that 10.6% is crazy high for a home equity loan. Even in 2019 that was high. Current rates were around 7% for people with decent credit. I’d been overpaying for five freaking years.
She asked what my credit score was now. I checked – 741. She said with that score I could probably get 6.5% to 7% easily. Asked why my score was so much better than when I got the original loan. Told her I’d paid off credit cards and haven’t missed any payments in years.
Started Calling Lenders That Week
Called four lenders. Told them I wanted to refinance my home equity loan. All four asked what my current rate was. When I said 10.6%, every single one had the same reaction – some version of wow that’s high.
Yeah, I know it’s high. That’s why I’m calling you people.
Got quotes of 7.3%, 6.9%, 7.1%, and 6.7%. That last one was from an online lender my sister recommended. Would drop my payment from $613 to $488. That’s $125 a month savings.
Application Was Pretty Standard
Applied with the 6.7% lender. The process was mostly online which was convenient. Uploaded pay stubs, tax returns, bank statements. They needed my current home equity loan statement. Needed proof of homeowners insurance.
Appraisal was done remotely. They used some automated system that looks at property records and recent sales. I didn’t need someone to come to the house. My house appraised fine – way more than we paid for it in 2012.
The whole thing took about a month. Got approved, signed documents electronically, new loan paid off the old one. Started making new lower payments in April.
The Facebook Ad Changed Everything
Never thought I’d say this but that Facebook ad actually helped me. Usually those ads are garbage. This one saved me thousands of dollars by making me ask can you refinance a home equity loan.
I showed my wife the ad later. She said she saw similar ads all the time but never clicked them. If she’d clicked one a year ago, we could’ve saved even more money. We both just ignored them because we assumed they were scams.
Now I actually read those financial ads instead of scrolling past. Already found a better deal on car insurance from one. Saved $45 a month on that too.
What I Learned About My Own Ignorance
This whole thing taught me I don’t know nearly as much as I thought I did about money. I had a home equity loan for five years and never once questioned if I could do better.
Didn’t know what a good rate was. Didn’t know refinancing was an option. Didn’t know I should check rates periodically. Just assumed everything was fine and kept paying.
My sister said financial illiteracy costs people thousands of dollars every year. I’m living proof of that. My ignorance cost me at least $7,500, probably more when you factor in all the interest.
Could’ve taken a vacation with that money. Could’ve put it toward retirement. Instead I gave it to the bank because I didn’t know can you refinance a home equity loan was even a question worth asking.
My Friends Had Similar Stories
Mentioned this whole thing to friends at a barbecue. Turns out three of them had home equity loans too. Asked what their rates were.
One had 9.8%. Another had 11.2%. The third one had 8.9%. All of them just assumed that’s what home equity loans cost. None of them knew they could refinance.
Told them all to call lenders immediately. I gave them my sister’s number. She’s gonna help all three of them refinance. Probably save them each several thousand dollars.
What I’m Doing Different Now
Check interest rates on all my loans every six months now. Set a reminder on my phone. If rates drop, I look into refinancing. Not making this mistake twice.
Actually click on financial ads sometimes to see what they’re offering. Most are still garbage but occasionally there’s useful information.
Talk to my sister about money stuff regularly. Should’ve been doing that all along. She knows way more than me and gives good advice.
The Answer Nobody Told Me
The answer to can you refinance a home equity loan is yes. Obviously yes. But nobody told me that for five years.
Not the bank when I got the original loan. Not my friends or family. Not anyone. Just had to figure it out myself from a Facebook ad of all things.
If you’ve got a home equity loan, check your rate. If it’s over 8%, you’re probably overpaying. Call some lenders. Get quotes. See what you could save.
Don’t wait five years like I did. Every month you wait is money you’re throwing away. I threw away $7,500. You might be throwing away even more.
Where I Am Now
Been in the refinanced loan for about six months. Already saved $750 compared to my old payment. In another six months that’ll be $1,500. By the time the loan’s paid off, total savings will be around $9,000.
Doesn’t totally make up for the $7,500 I wasted but it’s something. At least I’m not wasting money anymore.
The question can you refinance a home equity loan seems obvious now. But it wasn’t obvious to me for five years. If you’re wondering the same thing – yes, you can. Stop waiting and do it.
