Short answer: yes, you can refinance a home equity loan. You can replace it with a new fixed‑rate second mortgage, convert it to a HELOC (or vice‑versa), or roll it into a new first‑lien cash‑out refinance. The right move hinges on rate trends, how long you’ll keep the home, and whether you want lower payments, lower total interest, or more flexibility—you rarely get all three at once.
If you’re comparing structures, costs, and break‑even timing side by side, platforms like Tiger Loans offer a range of solutions tailored to different financial needs and can help you model payment and APR scenarios before you commit.
The main refinance paths
1) New fixed‑rate home equity loan (rate/term).
Swap your current second mortgage for a fresh one at a better rate or shorter term. Good when you like the second‑lien structure but want payment certainty or a faster payoff.
2) Convert to a HELOC.
Exchange a fixed loan for a revolving line—useful if you’ll borrow and repay in phases. Beware variable‑rate risk; look for HELOCs that let you lock portions of the balance at a fixed rate.
3) HELOC → fixed home equity loan.
If rising rates made your HELOC painful, fixing the balance can stabilize cash flow. You lose redraw flexibility, but you gain a predictable payment.
4) Cash‑out refinance (roll first + second into one).
Replace both loans with a single first mortgage. Often delivers the lowest rate, but you’ll restart amortization and pay higher closing costs. Makes sense only if the new first‑lien rate and term beat your blended cost—and you plan to stay long enough to hit break‑even.
When refinancing makes sense
- Rate relief: Market rates (or your credit profile) improved enough to drop APR meaningfully.
- Payment management: You need to lower the monthly by extending the term—or prefer to shorten the term to slash total interest.
- Stability over flexibility: Variable HELOC payments feel risky; a fixed loan calms the budget.
- Simplification: One mortgage payment is cleaner than juggling two.
- Removing fees: Your current HELOC carries annual or inactivity fees you no longer want.
When to pause
- You already have a great rate. Don’t throw it away just to reset the clock.
- Short time horizon. Selling in a year or two? Closing costs can swallow the benefit.
- High CLTV. If combined loan‑to‑value is near the lender’s cap (often 80%–85%), pricing gets worse—or approval fails.
- Early‑closure fees. Some HELOCs charge if closed within 24–36 months. Do the math first.
Approval checklist (what underwriters will scrutinize)
- CLTV: Keep it conservative; lower CLTV = better pricing.
- DTI: Aim for ≤ 40% after the new payment.
- Credit score: Higher scores unlock better rates; clean up utilization and disputes before applying.
- Income stability: W‑2 consistency is simpler. Self‑employed borrowers should prep two years of returns, YTD P&L, and business statements.
- Title & liens: Any old HELOCs, judgments, or tax liens must be cleared or subordinated.
- Property type & occupancy: Owner‑occupied single‑family is easiest; condos, multi‑unit, investment, and manufactured homes often face tighter overlays.
Costs, timing, and funding
Expect appraisal/valuation, title, recording, and possibly origination charges. Home equity refinances typically close in 2–6 weeks, depending on appraisal turn times and how fast you satisfy conditions. Owner‑occupied loans generally include a three‑business‑day rescission period after signing before funds disburse.
Should you combine the first mortgage with the second?
Run both routes:
- Keep the first, refi only the second if your first‑lien rate is excellent.
- Cash‑out refi if today’s first‑lien rate plus costs still beats your blended rate and you’ll keep the home long enough to break even.
- Always compare APR to APR, not just headline rates, and model same‑payoff scenarios (e.g., making extra principal on a 30‑year refi so it pays off when your current loans would).
Risk controls that protect you
- Stress‑test payments. If a job change or expense spike would strain you, choose the shortest fixed term you can comfortably afford or borrow less.
- Avoid term creep. Don’t turn seven years left into twenty without a plan; automate extra principal to keep your original payoff horizon.
- Read the fine print. Verify prepayment penalties, early‑closure fees, rate‑lock rules (for HELOC segments), and any balloon terms.
If you’re a qualifying service member or veteran, you may also be eligible for VA Loans that offer favorable terms compared with many conventional products—sometimes providing the funding you need without stacking a higher‑cost second lien.
Bottom line
You can refinance a home equity loan, and it often pays—when the new structure lowers your APR, locks in payment stability, or simplifies your debts without extending the timeline into eternity. Price every path, include fees, stress‑test the budget, and pick the option that still works when rates rise and life gets loud.
