Took me three years to figure out can you refinance a home equity loan was even a question worth asking. By then I’d already thrown away over eleven grand in extra interest payments. It still makes me mad when I think about it.
The rate was 9.8%. Monthly payment came out to $658 for 12 years. It seemed expensive but I didn’t really have a choice. The house needed the work done.
For three years I just made the payments and never thought about it. Never occurred to me to shop around for better rates or see if I could refinance. Just paid $658 every single month like clockwork.
Then in 2024 my wife’s friend Sarah came over for dinner. She works at a credit union. Got talking about mortgages and loans and whatever. I mentioned we had this home equity loan at 9.8%. Sarah literally spit out her wine. Said you need to refinance that immediately.
I was confused. Asked her what she meant. She said can you refinance a home equity loan – of course you can, and 9.8% is way too high. She said current rates for home equity loans were like 7% if you had decent credit.
Next Day I Started Freaking Out
I couldn’t sleep that night. Kept doing math in my head about how much extra I’d been paying. By morning I was in full panic mode.
Spent my whole lunch break calling lenders. The first one quoted 7.4%. The second one quoted 7.1%. The third one quoted 6.8%. The fourth one quoted 7.2%.
Plus the $4,680 in higher monthly payments. The total comes to almost $8,000 wasted. And I still had nine years left on the loan.
All because I never asked if refinancing was possible.
My Wife Was Mad At Both Of Us
Told my wife the numbers that night. Then she said why didn’t we check this sooner? I said I didn’t know we could. She said she didn’t know either but we should’ve asked someone.
She was right. We’re both adults with college degrees and we couldn’t figure out that loans can be refinanced. Pretty embarrassing honestly.
My wife asked if there were other things we were overpaying for because we didn’t know better. Good question. Started looking at our car insurance, our cell phone plan, everything. Found out we were overpaying on a bunch of stuff.
But the home equity loan was the biggest waste by far. $8,000 gone because we didn’t know can you refinance a home equity loan.
Applied With The 6.8% Lender
The application process wasn’t bad. Took about five weeks total. Had to provide the usual stuff – pay stubs, tax returns, insurance info.
If my score had stayed at 694, probably wouldn’t have gotten as good a rate.
Closed on the new loan in early March. The old loan got paid off automatically. Started making the new $528 payments. Every month I make that payment, I think about the $130 I’m not wasting anymore.
Calculated The Total Damage
Once everything was finalized, I sat down and did all the math. I wanted to know exactly how much my ignorance had cost us.
Total interest paid in first three years at 9.8%: $9,500 Total interest I would’ve paid at 6.8%: $6,200 Difference: $3,300 wasted in extra interest
Higher monthly payments for 36 months: $4,680 wasted
If I’d kept the 9.8% rate for all 12 years: about $38,000 in total interest Refinancing to 6.8% for remaining 9 years: about $19,000 in total interest Savings going forward: roughly $19,000
So I already wasted $8,000 but I’m saving $19,000 going forward. Net positive of $11,000 by refinancing now instead of never. But it still hurts knowing I threw away eight grand.
My wife said at least we figured it out eventually. Some people probably never figure it out and just keep paying high rates forever.
Why We Didn’t Know About This
I think we just assumed loans are fixed. You get a loan, you pay it back at whatever terms you agreed to. It never occurred to us that those terms could change.
Also, nobody told us. When we got the original loan, the bank didn’t mention refinancing as a future option. Our friends and family never brought it up. It just wasn’t on our radar.
And honestly, we didn’t research anything. Just accepted the first rate we were offered and moved on with our lives. That was stupid in hindsight.
Now I know that can you refinance a home equity loan should’ve been one of the first questions I asked. But you don’t know what you don’t know, you know?
Sarah Felt Bad About Not Mentioning It Sooner
Sarah came over again a few weeks later. She apologized for not bringing up refinancing sooner. Said she sees people with high rates all the time at her job and just assumed everyone knows they can refinance.
I told her it’s not her fault. We’ve been friends for like five years and I never mentioned my home equity loan rate until that dinner. How was she supposed to know?
But she still felt bad. Gave me her work number and said if I ever have questions about loans or rates or anything financial, just call her. Free advice anytime. That was nice of her.
My wife bought her a really expensive bottle of wine as a thank you. Sarah saved us like $19,000 going forward. Least we could do.
What I Tell Everyone Now
I’ve become that annoying person who asks everyone about their loan rates. Friend mentions they have a home equity loan? I ask what their rate is. If it’s over 8%, I tell them to refinance immediately.
Already helped two people refinance their home equity loans. One had 10.1%, refinanced to 7.2%. Others had 9.3%, refinanced to 6.9%. Both saving over $100 a month now.
They thanked me like I did something amazing. I just asked them a question – can you refinance a home equity loan – and pointed them toward some lenders. It took me five minutes. Saved them thousands of dollars.
My Advice If You Have One
If you’ve got a home equity loan, check your rate right now. Like literally right now. If it’s over 8%, you’re probably overpaying.
Call three lenders tomorrow. Get quotes. See what you could get. Even if your rate is 7% or 7.5%, it might still be worth refinancing if rates have dropped.
The question can you refinance a home equity loan seems obvious now. But it wasn’t obvious to me three years ago. Or two years ago. Or even one year ago. Only became obvious when Sarah mentioned it at dinner.
Where Things Are Now
My wife and I are way more proactive about checking rates and fees on everything now. Refinanced our car loan too. Switched cell phone companies. Changed insurance providers. Probably saving $300 a month total across everything.
All because Sarah spit out her wine when I mentioned 9.8% and asked why I hadn’t refinanced.
Still mad at myself for wasting three years. But at least I figured it out eventually. Some people never do. That’s even worse.
The answer to can you refinance a home equity loan is yes, obviously, and you probably should if your rate is high. Don’t wait three years like I did. Check today. Could save you thousands.