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 RefinanceFinds.com.
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