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To build equity in your home you must either pay down the mortgage or have the market value go up. Your lender will decide if you have equity in your home. They decide how much your home is worth then they deduct how much you owe the difference is the amount of equity that you have.
Lastly, I hate to tell you, their are only three ways to get equity out of a home.
1) Get an equity line of credit.
2) Refinance, and pull some money out.
3) Sell the property.
You increase your equity every time you make a payment (assuming the property value doesn’t decrease) that's the portion that goes to principal. You can increase your equity faster with a 15 year vice 30 year mortgage. Your equity also increases as the homes value increases. A lender will need an appraisal to find your home's current value. I have seen that appraisal fudged to make the deal work out. Either way you assume more debt to get at that money (equity).
Your correct, your brother is wrong.
Hard to explain based on your question,but, if you put say 10% down towards the homes purchase, your applying 10% to the Principal or Equity. You then have 10% equity in the home.
I don't know where your brother figures that you cash out the equity at closing / purchasing the home.
You find more explainations on http://equity-line-s.blogspot.com/
haha, no.
Equity is the amount of value there is beyond what you owe. If you get a killer deal it might be worth more than you pay, but you cant caash that out at closing- you'd have to get an equity loan (aka pay that back). Aside from that, banks prefer you to have at least 20% equity-- so a 5% buffer isn't enough to draw from without paying high rates.
What your brother mean is ,that the house you are thinking to buy cost less, then appraised value. This is a equity you are buying, but in today's mortgage situation it is very hard ,rather impossible to get cash back on the closing, because lenders not allowing this kind of transactions. The only way to get the money on the closing is to agree to buy this house for higher price and get the difference from the seller after the closing, because he will get the check.
A home is only worth what the appraisal says it is.....It may be worth say $200K, but with the bad market it can only sell for.....$160K......that does NOT mean you have $40K in equity....
Equity is the result from owing less than the house appraises at. Remember, it can appraise high....but if there are no buyers...no equity. Your brother is dreaming.
A home is only worth what someone will pay for it. Unless you are buying from a family member and getting a gift of equity then the sale price or appraised value whichever is less will be the value used to calculate it. But either way you will not get money back at closing.
It's great that you will have instant equity but you CANNOT get cash back at closing. This is because the lender will use the LOWER of the sales price or appraised value to determine your loan to value.
Sorry to disappoint you, but again, you cannot get cash back at closing.
CW
having equity means that it is worth more than you paid for it and you can sell it immediately and make money (equity). unless you are talking about an auction or other unusual situation, the market sets the price of a home. so when you buy it at a market price, there is no equity in it or it would have sold for less. be careful. prices are still falling.
If the house appraises for more than purchase price, yes, technically you should be able to borrow 90% of the equity - a lot of lenders have cracked down on this due to so many folks getting 100% loans and then cashing out the equity and walking away, so I would check with your lender-
Unfortunately, NO. Not at least in the sense that I think you mean.
There are ways to get cash back at closing but it's more complicated and it involves multiple buyers and some creative investor techniques (that are legal if done properly)
But, in the context of buying a house that someone thinks is worth $X and you're going to pick it up at $Y and you would get the spread(the difference) of $D, then NO. If the home truly had built in equity then you would have to refinance the home and find a lender that had no seasoning requirements for a cash out transaction.
Please note, a house is only worth what a market will bear. The house is not worth what you think it is worth or even what an appraiser thinks it is worth. These are BOTH opinions.
Yes, the appraiser's opinion matters 10 fold over what you think because that opionion is what a lender is willing to accept in terms of financing.
However, If you have an appraisal for $X and put it on the market it may not sell for that. It could sell for more or less depending on market conditions.
What ever someone is willing to pay for your home, that's the true market value at that moment in time.
SIDE NOTE: A good way to find out what it is truly worth is to run a non-obligatory auction. The price will get bid up to watch the market will bear. Then if you comfortable with it, then accept the offer, if not pull it off the market.
There would have to be extenuating circumstances for a property to be sold with equity still left in it (as quantified by a recent appraisal).
For instance, if you bought a home directly from the previous owner in foreclosure and they had half the mortgage paid off, but they lost their jobs, ruined their credit, and thus can't refi, so they have no choice to sell. If you were lucky enought to get to them and say offer to split the remaining equity (buy their house for what is owed and only pay them for half of the remaining equity, then you could have, a 25% equity position.) Yes people do this. Again, another conversation.
Anyways, depending on if this purchase would be for an investment or for you personal residence then there are other things to consider, I would find your local real estate investors club and ask them.
Good Luck
Her condo is paid in full and she is a widow.
I guess she had a wild urge one day, so she went out and bought a rather sporty car.
I figure good for her, she worked hard and deserves it.
The issue is that she has an auto loan to go along with the difference owed from her trade. About 16K @ 6% for 60 months.
I suggested that she set up a home equity loan to pay off the car.
My reasoning is the tax write off for the interest paid.
Do all you financial experts consider this a good idea?
No.
Since she has a 6% car loan, it's probably not a good idea to get a HELOC to pay off her car. Since she is only working part-time, at most, she is probably in the 25% tax bracket, and more likely is in the 15% tax bracket.
Most HELOCs are around the prime rate of 8.25%, so her tax adjusted rate on the HELOC would be 8.25%x(1-.25) = 6.1875% for the 25% bracket or 8.25%x(1-.15) = 7.0125% for the 15% bracket, and that's assuming that she is able to use all of her deductible interest.
For 2007, the standard deduction will be $5350. At 8.25%, a $16,000 loan would generate $1320 in deductible interest. So unless your mother has a lot of other deductible items, she would get no benefit from the 'deductibility' of the interest.
She would just be paying a higher rate to finance her car.
If she can get a rate that is secured by her home that is less than the 6%, it might be a reasonable idea, but the tax savings alone probably will not justify it.
She should leave it be. She has a good rate and would be foolish to risk her home for a car. The savings would be negligible after the first year. As a matter of fact, she would have to spend enough in interest to exceed the standard deduction, which is unlikely with a low rate around 6%.
If she did so, chances are she would not even be able to deduct the interest from her income. She has a good rate and is able to make the payments. If anything, perhaps she wants to pay it off sooner.
Well, I don't qualify as a "financial expert" but I would say "no". While I agree with your reasoning regarding the mortgage interest deduction, I can't see putting my residence at risk as collateral on a loan just to pay off a car. She's got a decent interest rate on the car and in 5 years it'll be paid off (assuming she keeps it that long). If things REALLY went sour and she couldn't pay for the car, so what? They repo it and she still has her condo. If she couldn't pay the mortgage do you really want your mom facing foreclosure in her retirement years? Peace of mind can be a very valuable thing.
Bad credit is one of the worst problems to have... however there exists a solution.
I will hereby talk from my personal experience.
I did debt consolidation a couple of years ago, however If I had to do it again I would pay to some minor details,
if someone wants to get out of debt today it is pretty easy with a debt consolidation plan, however it may get a bit tricky at times, I suggest you get as much information as possible online on this first,
a good place to start in my humble opinion is astraight to the point ebook with question and answer I found :
http://umgarticles.atspace.com/debt-consolidation.htm
if it helps kindly remember me in your voting!.. cheers!
Why not wait until you sell your home and use some of that money to pay off credit card debt?
It makes no sense to take your house off the market and add another mortgage. The costs of doing so can be high. And with housing prices falling in many parts of the country you might need to raise cash to sell your home.
Here is an article http://wiz.sc/Loans with some information on loan options and the best plans.
If you get a home equity loan, you'll have all the fees and such to pay back when you finally do sell it. If they'll even give you a loan under such circumstances.
Not really a good idea to take your house off the market anyway. You may have to make some sacrifices elsewhere to come up with the extra money to pay down your credit card bill.
Cancel subscriptions, stop cable tv/satellite, drop the internet, brown bag it to lunch instead of going out, eat mac-n-cheese for a while, etc.
Not good for your credit rating to be bouncing from credit card to credit card either.
If you have good credit you can probably get a new car loan for about 6-8%, according to the area you live. All mortgages are equity loans, because you are borrowing against the equity on your home. Typically, a home equity loan is considered a loan on your home when you already have a mortgage. I your home is paid in full then you would really just be getting a mortgage. I haven't checked mortgage rates for a while, but you should be able to get a mortgage, with good credit, in the 6+ range. By getting a mortgage to pay for your new car, you can write the interest off on your taxes. You have to be careful, of course, because you are risking your home. I hope this helps a little.
If you have unpaid bills, then I would not be going out to by a new car. First, get the bills under control. Do you need a new car? I would take care of my bills first, weigh the pro's and cons of purchasing a new car. THEN - go to your banker or financial advisor and get their opinion. It really depends on your situation and interest rates.
If your house is paid for, it's not a bad idea, just remember that will be another monthly bill to add to your budget. The rates are good right now so I'd check it out. Just make sure you explore all your options and work out what the monthly bills will be before you sign on the dotted line. I made the mistake of getting a home equity loan and buying a new car at the same time. I paid off some credit card debts but within a year started using them again. Once you pay them off, cut them up and don't use them again then the loan will be worth it.
Check out the interest rates on new car loans first. Some manufacturers are offering rates under 3%. You won't beat that with a home equity line of credit, even if you take the deductibility into account. Plus the line of credit probably has a variable and Bush and company unable to say "no" to any spending interest rates are only going to go higher.
It's all about net present value of your cash vs. the toys.
Are you going to make enough cash to cover the loan in the immediate future; or is it worth it to you to get the new toys and pay the finance fee over time?
It's clear that that banks want the later; so if you're comfortable paying the finance fees, then enjoy the toys.
Net present value = Is what I want worth more to me now than what I would pay if I saved up for it over time.
http://www.choicefinance.net/home-equity-loan.htm
do you know that your are going to be paying for that car for the next 30 years at a percentage rate of appox. 6 percent you can get a car loan cheaper than that. As for the bills you have take a good look at the percentage you are paying (credit cards) can be very high. you might want to get a line of credit on your home to pay only these bills off. With the line of credit you only pay interest on the amount you actually use.
nope because you might lose your house
No. Actually, you are well off, because you can get a new first mortgage if you wish, and the interest rate on that will be better than on an equity loan. But the equity loan may have the advantage that you can repay, re-borrow, and re-repay when you wish, which first mortgage loans generally do not allow. Talk to your local banker and see what he says; mine has been very helpful.
The only tax issue that could ever arise is if you sell the house and owe more on it than you originally paid for it. This is called "mortgage over basis" and you need to talk to a tax expert if this becomes an issue.
Even if there is any Tax,you can always write it off at the end of the year.
Interest on a home equity loan is usually tax deductible if you itemize. Depending on how much the interest is and how many other deductions you have, this could work to your advantage.
A loan is not income, because it's a liability, and therefore not a "taxable event". But you can deduct the interest.
From what i do know, "no" there will be no taxes for the loan itself. Any taxes and interest are deductible to you when filing taxes for the year.
A bank can do what a bank wants because they're the bank. They're the ones giving you however-many thousand dollars of their money. Some banks have different policies, and that's not unheard of.
I guess you'll have to let them. But 2 appraisals is pretty common.
A bank can ask for anything they want, since you're the one asking them to give you the loan. If you don't like it, take your business to another lender.
This is legit, you do have to submit to it, and it's fairly common.
The bank wants to be sure that they are lending money on an asset that has the value you claim it does, so that they can recover their money if you default on the loan.
Also, as a side note, YOU asked THEM for money... not the other way around.
Actually it's quite common for a bank to require two appraisals before approving a equity loan. If the first one had been done properly (a walk through) instead of a drive by they would not be asking for the second.
I went through this myself a couple of years ago and they only required one because it was a walk through.
Remember the golden rule-"He who has the gold sets the rules". Since you are asking the bank for money they can set the parameters and criteria for getting the money.
It is entirely within their rights to do so-after all this is the security for their loan to you. And it is not uncommon at all.
If you are in the market for a mortgage, home equity loan, or refinance get up to 4 FREE No Obligation Mortgage Rate Quotes at http://www.m-o-r-t-g-a-g-e-r-a-t-e.com
yes
Actually Banks usually request 2 apprasials for a home loan so there is no bias. Alot of appraisers have certian homes they lik more then others. But that's in MN. Just do what the bank asks otherwise it will slow down everything.
It varies, but the most common are 30. To answer your question yes there are shorter terms. Which obviously would mean a higher payment and probably an adjustable rate. from jeff the loan agent
the most popular are 30 years, but you have 10 years withdrawal period and you have to pay it off for remaining term.
As housing market continues to slump, if you don't plan to delay your plan, please interview several and pick a good realtor or agent.
Bad ones will talk you into buying the largest property at your credit limit. Good ones will find you a good deal (Sellers are offering discount and incentives now).
Try to stay away from Adjustable Mortgage, because 30 year fix mortgage rate is very low right now. There is no reason to use Adjustable loans except fatter commission for loan agents.
Interests only loans are not good iether. Mortgage payment consists of two parts: interests and principal. Interests are like rent, which doesn't add to the equity to your house. It simply disappear as your pay it. If you want to use interests only loans, might as well rent, especially during market downturn, because housing price won't appreciate.
Finally, for tax benefits, talk to your CPA or tax accountant. Do not consult finance with realtors or agents. They get commissions when you sign the check!
Good luck!
This article gives you tips on negotiation:
http://biz.yahoo.com/brn/060909/19463.html
Articles about current market:
http://money.cnn.com/2006/09/25/news/economy/homesales2/index.htm?postversion=2006092513
5,10,15,20,25,30 years are all typical terms for a home equity loan.
I got one a few years ago. Mine is 10 years. There were a number of choices available when I got my loan. I believe from 5 years on.
evaluate the term of the loans, the interest rate you would be paying and if they are tax deductable now, and if you can make use of the deduction should you shift them to a home equity loan. Then, decide if there is any chance you could be unemployed or otherwise without the means to pay on the loans. If so, you may not wish to offer your home as collateral to these loans.
It's going to be a matter of balancing the interest costs against the risk to your home most likely.
Don't forget to match the terms of the loans when evaluating on a payment basis.
it is worth in to use the home equity or a refin as the interest is deductible; assuming you can deduct interest against your taxes.Some say not to do that as you then have a potential danger of loosing your home over your student loan, if paying the mortgage is a problem. Student loan interest can be very low compared to home equity or refin interest. You have to balance the two and also think of your housing situation, if you are planning to sell or move in the near future.
With $160k @ 5.785% and $40k @ 9.00% fixed, your blended rate is 6.428%. So if you were to refinance both mortgages, you should look for a rate that is lower than that. If you were to refinance just your 2nd mortgage, you should look for a rate that is lower than 9%.
If you were to refinance both mortgages, you wouldn't get either a Home Equity Loan (HEL) or a Home Equity Line of Credit (HELOC). You would get a new first mortgage, that would replace both of your current mortgages.
If you just want to refinance your 2nd mortgage, you could go with either an HEL or a HELOC.
HELs are generally fixed rate mortgages, like your current 2nd mortgage. They are for a single amount, and cannot be borrowed from again.
HELOCs are lines of credit that usually have variable rates, often based on the prime rate (i.e. prime + 1). For the first 5 - 10 years, you can borrow money agains the HELOC, often just by writing a check or using a debit card. During the time that you can take additional money out of the HELOC, you usually only have to pay the interest on the money that you have borrowed. Once you can no longer borrow money, the loan payment schedule will reset and you will have to start paying back principal, as well as interest. This can cause your payment to go up significantly.
Which type of loan you should get, or if you should stick with your current loan structure really depends on what you are trying to do. Would you rather have one loan or two? Would you rather be able to draw money out if you need to, or not?
A Home Equity Loan is simply a mortgage, often called a Second Mortgage (or third, if you already have two loans on your property.) When the bank issues you the home Equity Loan you get a lump of cash for you to spend, and you have a set time, payment and interest to repay it.
In a Home Equity Line of Credit- You don't actually get a loan at that time. it is like a credit card, but instead of drawing off of your bank account, it draws off your home equity. You can leave it there, and don't use it, not paying anything to the bank. But if something comes up, like you need to make home repairs, say, you simply write a check off the credit line and the loan begins then, for however much you actually use.
So you could have a HELOC for $50,000, not use it for 6 months (and pay nothing) then use $20,000 and start making payments on the $20,000 you used.
Hope this helps
You should consolidate your 1st and 2nd mortgage so you get a better rate for one single loan. Home equity loan or line of credit is the same. If you need to borrow money, home equity lines may be one useful source of credit. Initially at least, they may provide you with large amounts of cash at relatively low interest rates and they may provide you with certain tax advantages unavailable with other kinds of loans.
For more details on how to choose a loan program, check it our here -
http://www.arizona4pinoys.com/choose-a-loan-program.html
Unless you plan on taking out any money to renovate or pay down any high interest credit cards (consolidate). The goal would be to keep your current interest rate on your first, and get rid of your 2nd as soon as you can without having to re-fi. To re-fi now would put you in the same interest rate on any HELOC or fixed loan. The difference between the to 2 is that one is fixed and one is a credit line (limit).
By paying every two weeks will help you decrease on the years of the loan, and save you much more in interest. Then if you are able add any additional to the principle, will only continue to give you a plan of action. Set a goal to pay your second within 5-10 years.
If you have any question feel free to contact me.
There is no specific time period that you must wait before getting a home equity loan. Instead, you need to wait until you have enough equity in the home to cover the amount of the loan.
If your current first mortgage is for 80% or more of the purchase price then it is unlikely that you will have enough equity for a home equity loan at this point. You will have to wait until you have paid off some of the loan or the value of the house has increased.
If your current first mortgage is less than 80% of the purchase price then you may be able to get a home equity loan immediately. Speak to a lender to find out if you qualify yet for a home equity loan.
Absolutely, you can buy the house for under market value, and then get it re-appraised, and follow up with a home equity loan right after. Just becuase you baught it for a certain price does not mean thats the Real value of the house. I could sell you a house for $500, it does not mean its worth only $500. 1st step is to get it appraised again. Hoep this helps.
Talk to your lender about it now. Don't wait.
Oh honey, if you're buying the house for under market value - you don't have *instant equity*, you've just dropped the value of your house to what you've paid. AND you've dropped the value of all the homes in your neighborhood. Be prepared for angry neighbors. :(
You're not going to have any *equity* before 6 months, sorry!
If you are a first time borrower of a home equity loan it is imperative that you have a checklist of essential questions that you need to ask each and every lender. The answers to these questions will provide a valuable reference to base your comparisons on. What’s the interest rate? Knowing this is crucial. The interest rate will determinepercentage by which the adjustable rate will change. What is the Annual Percentage Rate or APR? The APR on the home equity loan will determine the yearly payment you will need to make towards this.The higher the payment in terms of points, the lower is the interest rate.
No way
Sorry.
I have considered and researched other alternatives to a home equity loan, so I just need to find the answer to this question. I can't seem to find it on the Internet, and I have asked two mortgage people...and they don't even know.
Not necessarily! Because the bank's appraisal with the new value is not shared with anyone......also, typically, property taxes are assessed when there is a transaction on the property and unless you need the county's building dept. approval, you should be fine...
I certainly would not think it would. The amount of money that you can borrow is based on the appraised value of the home. The only way the value would go up is if it were appraised higher then it's current appraised value. As long as you don't borrow more than the current appraised value, then your taxes won't go up. If you happen to get appraised for more then the current appraised value and your county tax appraiser finds out about it, then they could possibly reasses your taxes based on the new appraised value.
To verify this information, I would call your county tax appraiser's office to see how they handle this.
Property taxes are based on what the state or locale assesses your house at, not what the bank does. Private assessors often assess your house at its market value, while assessors for tax purposes use a different formula.
No. The taxes are generally on 1/3 of the market value of your home in most areas. The taxes are never taken from the existing liens on the home.
your property tax will not raise until the county assesor raises the value of your home. The only thing that you need for an equity loan is an appraisal value that says you have equity. To get this, you don't have to go through the bank that you are getting the loan from. You can pay any licensed appraiser to do it for you
A home equity loan will not increase your property tax. Property tax is based on what the county assessor decides your house is worth, not what the bank has decided your house is worth.
No...your property tax is based on the value of your property.
Not to contradict one of the other answers here, but PMI is applied when the first mortgage is over 80% loan to value (not 70%). In simple terms, if your home is worth $100,000 and your first mortgage is $80,000 or less, you should have no PMI.
To have the PMI removed, there are some options. First, you should call the mortgage company and ask them whether or not they require a full appraisal (some companies only require a BPI - Broker's Price Opinion, which should cost less than $100). If they do, ask them for a list of the approved appraisers in your area. You should then be able to go to your local lender for the HELOC (Home Equity Line Of Credit) and ask that lender to use one of the appraisers on the list.
Another option would be to ask your lender to have the appraisal done (then they can remove your PMI), and then go to your lender with that appraisal. If the appraiser who does the job is on their list, it should be easily usable.
Third option, but probably most expensive, would be to go to your lender (with your current loan information) and ask what benefits there are for you refinance. This could work to your benefit if you either have a higher interest rate (your rate will go down on the first mortgage with a lower loan to value ration) or if you have an ARM (Adjustable Rate Mortgage) that will be adjusting soon.
Most importantly, don't forget that the HELOC or second mortgage you get will have a higher interest rate. In most cases, though, it's a small bit higher for total payments than your first mortgage plus your PMI. You make up for this with the interest deductions you can take on the second at the end of the year. Make sure you ask your accountant or CPA first to get all of the details on this.
Best of luck to you - you seem to have your ducks in a row, and your plan should work well for you.
Sean
Mortgage companies don't like to tell you and they sure as heck WILL NOT REMIND YOU that after 3 years, the PMI, if no late payments, and all in good standing, will be taken off if you send a letter to the company asking them to take it off and proof of no late payments. All you ever have to do is call and hopefully get a REAL LIVE PERSON, inform them its been 3 years and you want the PMI dropped. They will tell you exactly what to do, pretty much what I said above and that should be it. But you make sure that you talk to someone that really knows what you are talking about. Get their name, department, date, time of day that u call them, incase it doesn't go through the 1st time. You will have proof. Always keep an extra copy of what u send them and when you send the letter and proof to them, send it where someone has to sign for it and you get a receipt back in the mail stating that they received your info. Keep it with your papers. Make sure you check to see if PMI has been taken off. Keep on top of it until it is. Good Luck!
When you have the equity appraisal done, you can also forward that information to the mortgage company, and specifically request that the PMI be rolled back, if not eliminated.
As a general rule of thumb, PMI is required by most mortgage companies for the first 30% of the original loan value. So, at 209, your mortgage company is thinking you'll be required to carry PMI until you're at 146 or so. Doesn't hurt to ask, though.
Good thoughts on raising the capital - I like it. Good luck! - Stuart
All loans are negotiable. Some lenders will lend you more than 100% of the value of your property. A lot depends on your other assets, income, debt. etc. You'll probably also find that the interest rate is less favorable.
With all the different finance available, it is easy to borrow up to 120% of the present value of your home. assuming you have a decent credit rating and a stable income as well as work history.
no you dont i just did it and if her house was appraised for say 150,000 and her actual loan amount is say 100,000 she has 50.000 in equity it weird how they do it but i just got a 50.000 equity loan and thats how they said it works
when loaning money, it can and will ruin a friendship.. have your friend sign a I.O.U.. its never a good idea 2 loan money 2 another.. they find it soo hard 2 pay back.. always a chance she can't get a home equity loan..
Do Not do this unless you want to lose a friend.
Help her get 2nd 3rd job to get her money in order, she is looking to be out of the house shortly.
Have her visit DaveRamsey.com to learn before she loses it. You need to visit also.
Sounds like your friend is in dire straights. If she needs to borrow money to pay her mortgage, she really needs to rethink her situation.
Taking out an additonal mortgage is a possibility, even up to 100% or more of the total value of the loan, but if she's taking a new mortgage out to pay you back for the original mortgage she couldn't pay, she has things way backwards.
I do not recommend it, as the new equity line will come with a new required monthly payment that could send her into foreclosure.
In order to take a home loan, all owners must sign. When you got your first mtge, were you still in school, and unemployed? Payback will come from the household income, not just your husband's salary. Banks will look at investments, and any other source of income. You should not be a drag on the loan, and no one will know whether or not you have any student loans since they are in deferment.
Since you are not currently employed, there's no reason to put you on the mortgage application anyway. Your debt would raise the ratios and you have no income to compensate. Also, you do not have to be a borrower to stay on title. However, if you live in a community property state, you will still need to sign the note proving that you knew about and was agreeing to the 2nd lien on the property.
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Hello Dear
I am Brown Wilson. A certified, reputable, legitimate & an accredited private lender.
I loan money out to individuals in need of financial assistance.
Do you have a bad credit or you are in need of money to pay bills?
I want to use this medium to inform you that i render reliable beneficiary assistance as I'll be glad to offer you a loan.
Services Rendered include:
*Refinance
*Home Improvement
*Inventor Loans
*Auto Loans
*Debt Consolidation
*Line of Credit
*Second Mortgage
*Business Loans
*Personal Loans
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Since you are not currently employed, there's no reason to put you on the mortgage application anyway. Your debt would raise the ratios and you have no income to compensate. Also, you do not have to be a borrower to stay on title. However, if you live in a community property state, you will still need to sign the note proving that you knew about and was agreeing to the 2nd lien on the property.
In order to take a home loan, all owners must sign. When you got your first mtge, were you still in school, and unemployed? Payback will come from the household income, not just your husband's salary. Banks will look at investments, and any other source of income. You should not be a drag on the loan, and no one will know whether or not you have any student loans since they are in deferment.
The home equity loan or 2nd mortgage can initiate a foreclosure and you could lose your home.
Some options are:
1. try to refinance
2. sell your home - if there would not be enough from the sale to pay back the loans, you should find a Realtor experienced in short sales
3. some people rent out a room for extra income to help get through difficult financial times
Contrary to the prior answer who properly suggested that you take all "free" advice as being valued at the exact price you have paid ($0), this is not brain surgery.
A home equity loan is just another expression for another mortgage/trust deed against the property.
Go into default and the lender will initiate foreclosure proceedings. Like any other foreclosure you may want to renegotiate your "Home Equity Loan" Depending upon your real estate market and local prices, your bank might want to cooperated.
Check with your local state law regarding potential deficiency judgments. This loan was not a purchase money loan (i.e. it was not money given to you at the time of property purchase used to complete the purchase)
This matter in somes states an not in others. Also the means of foreclosure may have a bearing on the rights to a deficiency judgment.
If a deficiency judgment is likely, consider asking the financial institution to take back a "Deed in lieu of Foreclosure"
Many realtors will have the easy answer to this. You might even go to a local book store. This is not complicated and even the financial institution might provide you credible information.
Good Luck
They can and probably will foreclose. That's why your home is the security for the loan.
At our bank you need a 720 credit score now, its become very tough. You can also only go up to a total of 80% of your home loans to the value of your home.
I NEVER would advise someone to not make a payment just before selling their house or refinancing. I work on the wholesale side for a bank and I always see borrowers who screw themselves by getting a late payment right before their loan closes. If you make your payment / sell your home within 30 days of your payment date (nov 1st - dec 1st) then you have nothing to worry about. HOWEVER, time and time again something happens where the loan doesn't close in time and the payment gets posted late. Now you have a credit late on your report affecting your future ability to obtain credit.
Lets say your "buyers" can't close their loan in time to purchase your house. The other lender goes out of business (which is happening a LOT these days) or changes guidelines or something (also happening a lot). Your buyer can't close, you spent your mortgage payment and now your payment is due. Now you get a late payment and can't qualify for your new home purchase. I've seen it a million times.
Just my 2 cents....
It doesn't make much sense because you have to pay off both loans at closing anyway. What difference does it make which one you owe 1k less to?
Not smart, especially before closing.
You do NOT want to mess with your credit or change anything. Even if it would be nice to have an extra $1000 laying around to help with the closing, you have an obligation to the mortgage FIRST.
Generally a house payment that is due on the first is often given a 15 day grace period, thus you can pay anytime between the 1st and the 15th without penalty. If this is the case for you, you can skip the payment!!!
But to use the money to pay off a home equity loan would be silly since the house is being sold and both loans would have to be paid off for the property to transfer. The home equity lender can receive your money before or on the same day as the closing and it won't likely change your net profit or loss.
Actually, you can ask your lender to add that last payment amount into your payoff for closing. That way you don't have to pay it and the lender is aware of that. If they agree to this, make sure they give you something in writing. If you do pay it, and it's already been including in the payoff, they will simply send you a refund check.
This doesn't make sense to me. It's not a mortgage. I'm just borrowing against the house. Why is there a lien to be released? I still have 15 years left on my mortgage.
YEP, absolutely. Filling fee for the Release of lien. Makes it an item of record. It WAS TOO a mortgage, that's what you had, a second mortgage, a line of credit or a HELOC. Lender can't charge a fee, but county can and does.
A home equity loan IS a mortgage. You used your house as collateral..thus the mortgage.
You do remember signing a mortgage note at the closing of you HOL.
Till your loan is fully paid off, you can claim the interest amount as paid by you or accrued on the loan as Income Tax benefit but if you money pay it otherwise you are unnecessary paying interest.
It is a debt secured by your house, but it is not acquisition debt, so there are restrictions. If the loan is for less than $100,000 then the interest is fully deductible. If the loan is for more than $100,000 the interest is deductible only if the loan paid for improvements to the house.
Yes, the interest is still deductible.
Keep in mind that you don't what to pay interest just to get a tax deduction.
Your equity loan is still tax deductible, but the paid mortgage is not, because you can only deduct the interest you have paid for the year. You can also still deduct the taxes you paid for the year on the property. For further information regarding this, consult your accountant.
It's becoming very common for people to manage financial transactions online and not receive statements by mail.
How you do this depends on the mortgage company you partnered with for your home equity loan or line of credit.
Go to your company's website and there should be a section for customers to log-in to their accounts. If you don't know your log-in or don't know how to access your account, you'll need to get in touch with your company's customer service.
Once you are in your account, you should be able to access your statements.
Once you get used to it, doing financial transactions online is convenient and easy. All your information is usually available 24 hours a day, 7 days a week and you don't have to keep files of paperwork in your home.
Contact the entity that gave you the loan and ask for there web site address for online statements.
i think that the below website will help you to find the right solution
It's doubtful that you can find a CD which will pay as much interest as you will pay to your home equity line. Hence, you will end up in the negative on this arrangement. Of course, you can deduct the interest from your federal income tax return, but you will also have to include the interest earned as taxable income. You're still in the hole.
Chances are you'd be paying higher interest on the loan than you'd get on the CD. And you'd have to be paying back the loan each month during its term, but you'd have all the money tied up in a CD so would have to find the money somewhere else to make the payments.
You are going to have to make the workmen into "partners". When the work is done, you will sell the house and pay them 110% of their normal pay. Otherwise, no one is loaning for fixup money..
If you have enough equity in your primary residence to take out a loan (probably a home equity line of credit, or HELOC), you can use that cash for whatever you want. Including fixing up a rental property.
And, remember that those repairs are tax deductible. And, so is the interest on the HELOC.
In a nutshell, you need to put your house up for sale and include the home equity loan amount as part of sale price for house- Say you owe 100000 on your current home and have a 30000 H.E.loan. The minimum that you could afford to get for your house is 130,000. Now a reputable real estate agent will be able to advise you on what your home is WORTH. The worth may be more or less than what you need to get out of it. The housing market is in a decline right now and even if your house is worth more than 130,00 (if that was what you needed) you may not get anytakers at that price. An agent will help you figure out what amount and where you can get financing for a new home. I recntly went thru this myself. I could get what I wanted for my home but not find another home equal or better than mine for a comparible price where I wanted to move to. I decided not to take the job I had been offered because I simply could not afford it. I think if you are very determined to do this though that it is possible. The biggest thing you could do is find a fabulous real estate agent who is willing to spend the time working with you to point out all the great features . Many real estate companies offer online adverstising and I highly encourage you to do this as- it is free or very cheap and many, many more people will see your house. If you do this make sure you take really good, clear pictures and include LOTS of them. You can even do a video tour to post online at some agencies. Some agents want to take the pictures and they usaully do not do as much or as well as you would. I have a friend who is an agent in KY and she said it is because they just don't have time to take and post a whole lot of pictures. This is a lame excuse. It does not take long to post pics if you know what you are doing. Make sure your agent is internet savy. Those that are will usually brag about it. Staging your house may be something worthwhile too. You know- have a professional stager come in and tell you what to remove and soemtimes rearrrange, add etc. This can help you sell your house much faster and for more. People looking for a home have a hard time piucturing their stuff in your house when all of your stuff is still present. One other tip- please DO NOT GET AN ADJUSTABLE RATE MORTAGE!!!! So many people are losing their homes due to increases in interest . I assume you know this but I had to say it. Good luck to you. I applaud you for trying to do this to make things better for your kid.
If you are a first time borrower of a home equity loan it is imperative that you have a checklist of essential questions that you need to ask each and every lender. The answers to these questions will provide a valuable reference to base your comparisons on. What’s the interest rate? Knowing this is crucial. The interest rate will determinepercentage by which the adjustable rate will change. What is the Annual Percentage Rate or APR? The APR on the home equity loan will determine the yearly payment you will need to make towards this.The higher the payment in terms of points, the lower is the interest rate.
First off -- talk to a real estate professional. They should be able to answer your questions.
Think of this as two integrated but separate steps.
Step 1. Sell you current house. Determine the selling price less the debt you owe and the costs to sell. The amount remaining will determine how much down payment you'll have for step 2.
Step 2. Identify a new home in the place you want to move to. Determine the purchase price. Then figure out how you want to pay for it using a combination of debt (new mortgage) and downpayment.
Never forget to consider income taxes on the gain (if any) on the sale of your home, insurance and property taxes.
it's not how long, it's how much equity you have in the house that you borrow against.
As soon as you have equity.
When your house is appraised and it can be sold for much higher than your mortgage that is your equatity and you can borrow a percentage of it.
no need to wait any specific time...in fact, some lenders will set one up for you at the same time they process the loan used to purchase the property...talk to your loan agent.
Not time limits at all, at the original closing if the property is worth more than the mortgage on it.
Why not get the money and fix the house right now! why pay two sets of closing cost?? Why pay the higher interest rate of a home equity loan when you can have a low rate and one payment instead of two? Your mortgage broker should be able to do this without difficulty. If not and you live in Indiana,Mich. Tenn, Fla. Ky E mail me and I'll do it for you, Those are the only states I do business right now, But there are a lot of mortgage folks here that answer questions so there is bound to be one licensed in your area that can help you.
I think if you have equity in your home, you do not have a time requirement.
Shouldn't matter how long you own it as long as your credit is good and there's equity in the home.
until the home has equity in it
There are national Lenders who have No Cost HELOC or Fixed 2nd loan programs.
Ask a reputable broker about those programs to avoid paying closing costs. (Citi and GBHE are two of the major providers of these products)
2 years..you have to build up equity 1st. don't take out another loan for fixing up the house it is way to early and banks will charge a HIGH interest rate..
For HELO interest on principal beyond $100k to be deductible, the proceeds must be plowed back into the property pledged as security. If it's used for any other purpose, the interest on the amount of the loan over $100k is non-deductible. To be considered as acquisition debt, the property acquired must be the security for the loan.
Quick answer ... NO
The HELOC is subordinate to your first mortgage, Arizona is a state where they can't come after you for the difference. Basically, the lender that did your HELOC will get screwed. the lender in 1st position just wants there money and may recoup from a sale. (Depending on how large your HELOC was)
But whatever the shortfall they WILL 1099 you for the amount they are out, that means that they report it to the IRS as income and guess what ... you owe taxes.
it would be wise to ask a real estate lawyer someone who specializes in this situation as this matter is serious.
there are so many homes available in the metro phoenix area around 50,000 on the mls alone.
a short sale you will owe it as income or 1099 , a foreclosure , which kills your credit, "may" allow to not pay the difference but see an attorney.
Since a HELOC loan uses your home as collatoral, the terms of when the lender can foreclose are written in the terms of your loan.
Basically, when you use anything for collateral the collateral is turned over to the lender (in this case your property) should you miss enough payments.
The lender can not foreclose until the number of missed payments specified in your loan agreement.
HOWEVER!!!!!! Under the law, when a lender makes a loan that requires collateral, foreclosure can be avoided by making a payment on the loan. It is much more difficult for a lender to foreclose on a HELOC.
If foreclosure is threatened the best thing to do is see a lawyer. Since you live in what is called a "common-law" State, Arizona, the ability to foreclose is also constrained by literally hundreds of legal precedents. These precedents have the force of law.
One aspect of "common-law" is that is more difficult for anyone to seize property. This "red thread" as lawyers call it literally goes back hundreds of years to medieval England. At one time Nobility could steal a commoner's land by saying they dreamed their ancestor did not sell the property and their title was a forgery. I am not joking. This is why "common law" when it comes to property has the protections that it does.
you have to pay it back.
If you are a first time borrower of a home equity loan it is imperative that you have a checklist of essential questions that you need to ask each and every lender. The answers to these questions will provide a valuable reference to base your comparisons on. What’s the interest rate? Knowing this is crucial. The interest rate will determinepercentage by which the adjustable rate will change. What is the Annual Percentage Rate or APR? The APR on the home equity loan will determine the yearly payment you will need to make towards this.The higher the payment in terms of points, the lower is the interest rate.
You can only deduct interest you are obligated for, and actually pay, for your 1st or 2nd home. If the co-signer has no ownership interest in the property, it is not their home, therefore, it is not deductible to the co-signer (even if they do pay it).
NO! Not unless he is paying the interest! EXCEPTION: You and he make up a written agreement between you two. It should state something like this 'in exchange for his (name) agreeing to co-sign my loan from (bank or lender name); I (your name) agree that when my tax return draft is prepared, we will determine what my total taxable income would have been IF I DEDUCTED THE INTEREST and what my taxable income would have been IF I DID NOT TAKE THE INTEREST DEDUCTION. [stop]
Now if you want to be able to let him (his name) take the deduction, just let him! DON'T YOU BOTH TAKE IT! ONLY ONE OF YOU. You see as long as it comes out the same from the Gov't standpoint, they don't care as long as each of you prepare your returns correctly, only one took the deduction, and each of you filed your returns, your cool.
The written agreement must exist! It must be prepared prior to 12/31 of the first year in which it becomes a factor.
{re-start}
{rest draft of agreement}
In this manner I am passing the rights to take the Interest Deduction to (his name)
[STOP]
Sign it in front of a notary public, and both of you save for at least seven years. If you do it again in the following year, write a new agreement.
Yes you can. But you have to follow the home equity guidelines.
http://www.associatedcontent.com/article/1525193/understanding_home_equity_lines_of.html
No.
No, not if they don't live in the home.
Anyone cosigning for something such as that would have to be on the deed to qualify. Otherwise is is not a home equity loan but a personal loan.
There is no specific waiting time, it depends on how qualified you are and how much equity there is in the property. If you're buying it with little down then forget it. You have to wait until the value goes up and these days values are going down.
there is no time perameter as long as the home is worth more then you paid for it [your amount of equity]
It would depend on whether or not you got a good deal when you bought the house. The real estate climate would dictate whether you had any equity or not. Equity is much like stock, it goes up and down in value. In California at this time in most areas, it is pretty flat. You might actually take a negative equity and go a little upside down. It is a crystal ball guess at this time. My crystal ball says about a year before prices rise.
My crystal ball was made offshore!
You can take a home equity loan once you've made your first mortgage payment. However, to do so, you must have equity in the home you originally financed. Some lenders may take into consideration the fact that you're buying another investment home and tally in the value of that home.
Good Luck with your investment!
I believe you can do it immediately...as long as you have instant equity in your home. Some people close on the two mortgages at the same time, even!
Your in luck my nephew who is a mortgage broker is here picking up my boat to go fishing. He said most houses are going down in value these day so it is highly unlikely a bank would do this unless you had other accounts or had an outstanding credit rating.
Well, let's see - A Home Equity Loan is a loan on the equity you have in your home. After you buy your home, you have no equity in your home because you have just started paying it off. So you have to wait until you have paid in enough money to actually have some equity!!
A better move would be to convince a mortgage lender that by improving the property, you would increase its value so the lender agrees to put money in the mortgage loan under certain conditions to cover repairs and improvements. We had a whole historic neighborhood recovered because a local bank was willing to take a huge house with a sale price of $40,000 and loan $75,000 on it for professional repairs. Because of the rising market at that time and the quality of the homes, the results were homes valued at $200,000 or more, now worth $750,000 plus.
Of course, it really helps to have a rising market which we don't right now.
only if you bought your home for significantly less than it's appraised value...you have no equity otherwise
Immediately.
Talk to your bank. My bank offers a loan that includes mortgage and home improvements for a house that needs to be fixed up before it is livable. As far as a home equity loan, you don't have any equity yet so you can't borrow against it.
You need to have equity in the home before you can get a home equity loan. It you really shopped around and bought a house that is worth a lot more than you paid for it, you can probably get a home equity loan now. There is no magical number of months or years you need to have owned you home. Just what the current market value is vs what you already owe against you original loan.
The # denotes seniority/position in chain of title. A first mortgage is a loan secured by the property that is in 1st position and gets paid what is due them first if the property is sold (municipal liens like property taxes are TRULY first, though).
A second mortgage is a loan that has a "junior" position behind a first mortgage. Home equity loan is just a colloquial term generally applied to second mortgages. A HELOC, or Home Equity Line of Credit (as mentioned by another responder) is a TYPE of home equity loan that acts more like a credit card in that you can draw on the equity as needed and pay it back and draw on it again and again during the "loan" term.
Technically you can have 3rd, 4th, 5th, etc. mortgages and any of those could be a "home equity" loan in that they would be loans secured by remaining equity in the property, but that would be highly unusual on a residential property.
1st mortgage is the one you got when you bought the house. The mortgage company that is on the deed with you. Second mortgage is usually from a different lender. In foreclosure the 1st mortgage holder takes back the house, the 2nd gets paid if there is any money left.
Home equity is a loan using the equity in your home as collateral. The terms of the loan are shorter and the rate usually a bit higher.
Home equity involves no closing fees in securing the loan.
Shop around a bit more. Try the bank where you keep your accounts.
You really want the cheapest and shortest loan you can get. Remember at this time we are not creating any equity in anyones home.
1st mistake is using lending tree, you are going to be pestered for months . the differences are the lien position, a heloc is a 2nd mortgage. best advice is go to your local bank and have them go through all your different options. Don't use a broker
If you have bad credit, you are less likely to be approved for a loan, or if you are approved, you may have to pay a higher interest rate.
Part of the decision will be based on what % the $80k in equity is of the value of your home. If your home is worth $800k and you have $80k (10%) in equity and bad credit, you are unlikely to be approved for a home equity loan. On the other hand, if your home is worth $160k and you have $80k (50%) in equity and bad credit, there is a good chance that you will be approved for a loan.
This is because the bank looks at how much they could realize from your house if they had to foreclose, and if you only have 10% equity, almost all of that could be eaten up by foreclosure costs, so the bank would lose money if they loaned you the $80k and then had to foreclose.
Not sure... it depends on how bad your credit is. You may just get a higher interest rate. If you're current on all your bills now, and have been for the past couple years, you can ask your bank if they will approve you without using your credit score.
I am a Morgage Banker and I can tell you that with most conventional HELOC's, you have to have decent credit scores to get a HELOC. I am sure you can probably find a subprime lender that may lend to you, but you'll pay a fortune in interest and fees.
A HUGE factor that is taken into account is how well you have been making your mortgage payments over the last 2 years. You can have 0 or 1 lates only in order to qualify for most programs. GL!
Please go to a mortgage broker, not a bank, and the broker will gladly go through the process with you. I used Mortgage Intelligence and had no problem. The only thing is, they might charge you a percentage more than the bank would, but they are very competitive. Check it out and do not apologize for your credit rating as there are thousands of reasons a rating might not be good. Make sure you can afford the payments though. Good luck! Try the link below.
you may get the loan, but the rate would be higher than someone with good credit.
I'd be very cautious about using your home to borrow on.... generally not a good idea... most people do it to pay off debt, like credit cards... but will find themselves back in the same debt again (now with a home equity loan too) because they did not change the habits that caused the problems in the first place.
The bank is interested in your ability to repay the loan. The home acts as security for the loan, but the bank does not want to take your home if you don't repay.
If you approach the bank, explain why you need the loan. If it is to repay other debts so that you pay less interest and make one payment to a bank rather than on many credit cards with higher interest, the bank will probably help you. If you want the loan to take a vacation while you are repaying credit cards whose balances will increase as you squander the bank's money, it will not be especially interested.
The bank will look to your sources of income and debt repayment history and ability. You determine your own credit rating by your spending and debt payment habits. You have to live with the credit rating you have developed for yourself
Then why do you want to put the house at risk by using it as an ATM machine?
You DO NOT save any money paying off bills with the house...all you do is take unsecured debt and turn it into secured debt.
Having a free and clear home is one of the most important assets a person can have.
Please work an extra job or something to save up money for what you want to spend money on. I would highly, highly recommend that you not go that route, especially when you aren't even married...b/c marriage gives you LEGAL protections that you simply do not have, when you are living together.
There's not enough information to really be able to say. How bad is bad credit? What kind of income do you have? How long have you worked at your jobs?
As for using your home as an ATM, there are pros and cons on this. It makes sense to get the money for home improvements this way, but please remember that home improvements do not always increase the value of your home, and seldom do they increase the value dollar for dollar. There's also -- how do I say this? -- there's the value to yourselves for meeting your obligations. Those old bills reflect some agreement you made with someone who loaned you money. Paying those bills is the right thing to do.
If those old bills are the reason your credit is bad, or if making payments causes you to live off credit cards, yes, get an equity loan to pay them off. Then stop using them, and make the biggest principal reduction payment possible to pay off the mortgage. There may be some tax benefits to doing this too because the interest on the heloan may be deductible but credit card interest isn't.
Call your bank and ask them what they think. If your credit scores are under 650, you'll probably pay more for a loan, under 620 you may not be able to get one at all.
You can get a new mortgage, the rate and terms depend on the severity of your credit derogs. Oh, and what state you are located in. I've been a mortgage broker for 25 years and one thing I know for sure - enough equity cures all credit problems. Let me know if you need any help.
You will probably have to get a regular mortgage & not a home equity line. There are still some lenders that will do this, but your interest will be anywhere from 9.95% - 16.85%. You will probably be able to borrow less than 50% of the value of the home. I am a broker in MI , MN & IN. Email me if I can help.
I think its home equity loan not the mortgage.
If you purchased the house with all cash and shortly thereafter refinanced the property it would be a first mortgage.
The mortgage are determined as to which mortgage is recorded first no matter what they are called.
Why would you purchase an investment property with all cash, and shortly refinance it. Qualify for and get the mortgage, keep the cash for other things. The only way this make sense to an investor is that time prevents you from getting a loan.
There are tax benefits to obtaining a mortgage loan. You should check with your tax consultant prior to making this transaction.
Most investors would not purchase a property and pay all cash with their own money for an investment property, it goes against the grain of being an investor. Being an investor you should try and get into a property with as little as possible and still make a profit so as the tenants rent can cover the mortgage monthly payment, taxes and insurance as well as a little left for maintenance. Investors would not tie their money up this way.
The next thing is that if you get mortgage loan as a non owner occupied home the interest rate is higher.
I hope this has been of some use to you, good luck.
"FIGHT ON"
iIt would be considered a completely bad move. But if you insist would probably be a first. it doesn't really matter the end result is the same. Even if there is no debt on the home if you have a loan on your home that you live in then it will effect the chances of getting it all together. Some companies aren't doing investment properties at all. Others are being very skeptical.
It would be a Home Equity Loan..A Mortgage is just considered for purchasing a home and since you are paying cash, there will be no mortgage. Why not just put some of your money down and finance the rest as a second mortgage? You can at least have some tax savings at that point.
What you plan and what the banks will do are totally different. Use the cheaper option.
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Why, if you had the cash, would you pay cash for the home and then take out a HELOC???
Why not just take a normal loan to buy the home, and invest the rest of the money????
I want to do some remodeling in my house like a new kitchen, all new travertine floors, new doors and some other things.
The total of my remodeling will be about $45,000 including all the labor and materials.
My question is: Do I get a home equity loan for 7% to8% or do I save my extra cash and pay for the remodeling in full in about 2-3 years after I pay off my house?
If I get a home equity loan for about 5 years, I will pay nearly $10,000 in interest alone. That’s a lot of money!
Any ideas?
P.S. I have no debt except my house loan. No credit cards, no cars, no school loans, no nothing!I have a credit score of 780 and I don't like to pay interest if I don't have to!
One plus with the loan is that you get to write off your interest on your taxes. That could bump you into a better tax bracket and actually save you more $$.
I would get the home equity loan and pay it off early. That way you can get it done now.
Dig this!!! Apply for some grants ! they are out there waiting for you to apply.!
IT DEPENDS IF YOU WANT THE WORK DONE NOW OR LATER. THERE ARE A FEW DIFFERENT AVENUES YOU COULD TAKE YOU COULD GET A AJUSTABLE RATE AND IT WOULD BE LOWER% THEN A FIXED. I WOULD LET THE EQUITY IN MY HOUSE WORK FOR ME. I AM A LOAN OFFICER AND I HELP PEOPLE LIKE YOU ALL THE TIME. 5 YEARS REALLY AIN'T TOO LONG TO PAY OFF A SMALL LOAN. THE TIME IT TAKES TO SAVE THE MONEY YOU WOULD BE ALMOST DONE PAYING FOR IT.
Dear Wife,
Can you save money and begin to update one thing at a time? It's nearly always better, in terms of stress and financial management, to avoid debt when possible. Here, it's not necessary to take a loan in order to buy a house or renovate to sell, so take your time!
-j.
#1 ask you accountant. you may be able to benefit from paying interest, ie tax breaks.
#2 With the decline in the market, your always better having cash in hand.
If there is an emergency you have the cash available.
I would say borrow and pay back gradually.
Completely depends on your financial situation and tax bracket. Sounds like you already have security, I'm willing to bet you don't have a ton of assets. Please don't take this as a personal assualt but being as responsible as you have been with money, I am sure you could have been ten times further (as far as net worth) if you would have used the money you've made in different ways.
Leveraging - it's how the banks make money. Borrow money at a low interest rate and lend it at a higher interest rate. For instance, that 7-8% that you'd be paying on a home equity loan...
If you where to take 100k from the equity in your home, borrowed at 8% interest only payments would come to 667.00/mo
Now put that 100k into an equity fund (such as the russel 3000) and get at least a 10% return on your money (russel 3000 average 14.9 over previous 10yrs) compounded annually and look what happens
1st year return = $10,000.00
2nd yr return = $21,000.00
3rd yr return = $33,100.00
4th yr return = $46,410.00
5th yr return = $61,051.00
6th yr return = $77,606.00
7th yr return = $95,366.00
8th yr return = $114,902.00
9th yr return = $136,392.00
10th yr return = $160,031.00
Total amount in fund at end of 10yrs = $260,031.00
Total spent on payments to home equity line = $80,040.00
Total profit = $79,991.00 / We'll call it 80k return for doing nothing, this is not taking into account your tax benefit either.
Make interest your friend, not your enemy.
Now as far as the home improvements... That's completely on you but I wouldn't finance home improvements, I would pay cash for anything that is not "necessary to sustain life". Financing unecessary things is why americans are in debt.
Speak to a qualified financial advisor.
You don't have to wait, but if it's less than 12 months, the lender is going to use the purchase price and not the appraised value. If you put money down for your purchase, you can take out a HELOC up to 100%. The rate will be higher, but you can pay it off with your HELOC in 12 months that's based off appraised value. Just make sure you ask what the termination fee and/or prepay penalty is.
Ask your loan officer you just used. There may be a prepayment penalty to refinance..
I can't speak for all jurisdictions, but in Canada one can get a home equity line of credit or home equity loan immediately if you have equity in a home. The conditions may vary, but in general you can get a loan up to 3/4 of the assessed value of the home minus any mortgage amount. The big advantage of an equity line of credut is the interest rate is generally close to prime and you can pay any money borrowed against it back whenever you like (unlike a mortgage where there are strict prepayment limits. You do have to pay at least the interest owed on the amount owed each month.
Depending on your circumstances this may not be helpful to you, but check with your bank (if you have a mortgage it is probably best to check with the institution holding it), you may be surprised what is available.
Bad Credit Rating in Home Equity Loans
Home equity loans is one of the quickest, fastest and easiest way in obtaining cash for debt payments, home improvements, education, emergencies and medical expenses. However, you might think that your loan will not get approved because of your bad credit rating in home equity loans. Think again.
Even if you have a bad credit rating in home equity loans you can still refinance your home mortgage loan. You can still get a home equity loan even if you have a bad credit rating in home equity loans. There are some lenders that offer loans to those who have bad credit ratings in home equity loans. Although, the interest rates and loan terms for those who have bad credit rating in home equity loans are less flexible than those who have good ratings. And finding an institution with low interest rates, good terms and no extra fees or charges that caters those who have bad credit rating in home equity loans is very difficult.
Most lenders that provide home equity loans to those who have bad credit ratings are likely to charge additional fees or offer higher down payment. On the other hand, some of these lenders have fixed interest and variable interest rates and some lenders features maximum repayment for borrowers, which usually is thirty years.
Some lenders tend to depend on the reports made by credit rating agencies. These agencies are the TransUnion, Equifax and Experian (collectively known as FICO, an acronym for Fair Isaac Corporation). These agencies evaluate the individual’s credit ratings by considering some factors. These factors include the past payment history, latest credit applications and remaining debts. The credit ratings range from 300 to 900. If an individual has a credit rating of below six hundred, it means that that individual belongs to the bad risk bracket. However, the rating of a certain individual may differ depending on the FICO agency. Some lenders offers home equity loans to individual who are in the middle of the score range.
Many individuals who have bad credit ratings tend to pay higher interest rates on a home equity loan, and these rates can accumulate up to thousands of dollars over the course of the home equity loan. Although, the credit rating can improve after a few years and the individual will be able expected to refinance the home equity loan and will get a better loan terms and deals with lower interest rates. This will depend on the individual’s current interest rates and whether or not the individual will get a fixed rate or variable rate in home equity loan.
It is important to always make sure that you review the home equity loan contract carefully before signing and do not hesitate to ask questions if there are some things that you don’t understand regarding the contract.
We've never had a home equity loan before, and I'm just wondering if we should go with the company that holds our mortgage, a different company, or does it matter?
Any tips would be helpful as we've never done this before.
Shop around but many lenders are getting out of the home equity line of credit business what is your equity to loan ratio on the first? Is it even possible to get one?
For matters pertaining to equity the authority that I go to is Marian Snow - best-selling author of "Stop Sitting on Your Assets". She talks about how to let your equity work for you, how to become your own bank, and secure your financial future. I got a lot of new ideas, and now view my money and financial management in a different way.
Preview the book here -- there's a lot of vital information you can't find anywhere else. I suggest too that you make a small investment on the book. It changed my total outlook on investments, mortgage, equity and personal finance.
http://www.stopsittingonyourassets.com/MarianSnow/preview/contents.html
You can contact Marian through her personal blog here:
There may be conveniences with choosing your current mortgage bank, like possibly less paperwork, or maybe no appraisal fee, or a combined bill/payment.
But you should really shop around for the best interest rate and lowest total fees. These are much more important that the "conveniences".
There are actually companies that will work with you for free to buy your mortgage away from your mortgage company and avoid your foreclosure. I would advise looking into this first. Try http://www.speedyrealestate.info. Good luck!
Interest on home loans is generally tax deductible. This includes equity lines.
The fees range from nothing to about $1-1500 tops. This is going to depend on the rate. Obviously the ones that have no closing costs typically have a higher rate. Typically for a smaller loan amount you want to go with a no closing cost option and for the bigger ones you'd pay the fees and get a lower rate.
we can get it for you for basically no closing costs at all we work with 70+ lenders give me a shout jslater@fortressonline.com or call me 888-345-9008 ext 105 my name is josh hope to hear from you soon!
Ask your tax advisor/cpa about the tax consequences. If you are under 100% of your homes' value, you should be able to write it off. Most equity loans have no closing costs, however, check what your early termination fee will be... The lender is fronting a lot of costs for you and they will lose money if you close out your loan early. If you don't want an early termination fee, you will pay closing costs on the line, probably between 1 to 2 thousand. more info on lines of credit, http://www.choicefinance.net/home-equity-loan.htm
The lender looks at the amount of ownership you have in the home and projects the cost of loaning you an amount of money up to that point.
Say for instance your home is worth $100,000. If you owe $20,000, then you own 80% of the value ($80,000).
The lender will take your application, have it appraised, offer you a certain amount of money (including interest). Next you are offered a closing date. Then you are offered checks that you can write out in the amount you want.
If its not the same lender on your primary mortgage, a deed is created giving that lender rights to your property if you default on your payments.
It's a loan that you can take out, outside of your home loan. It's due within 30 years just like your home loan. It usually has a higher interest rate than your home loan though. If you default on the loan, you can lose your house just like if you don't pay your mortgage. I suggest you contact you mortgagor and ask them about their home equity loans. Personally, I'd rather refinance my existing loan on my home, and take out money from the refinance to pay for my car (especially since interest rates are low) but there have been problems with appraisals now a days.
Google HELOC.
A $229,000 mortgage on a $277,000 property is an 82% loan-to-value (LTV) ratio. So, you have some wiggle room in obtaining a second (these usually max out at 90% LTV).
My first question would be where is the other $48,000 coming from for the purchase? If it's cash, then you will have no problem getting a home equity loan for about $20,000 with your remaining equity (up to the 90% LTV). If you came up with the $48,000 with a second mortgage, you're already at 100% LTV and, particularly with blemished credit, I doubt you'll be able to get the additional funds.
The fact that you were approved for $40K over the purchase price means nothing. A bank is only going to lend up to the value of the house and, in today's mortgage industry situation, I would be surprised if anyone were willing to go over 90% LTV.
The problem you will have is that for the 1st year you own the house lenders go by the lower of the appraised value, or the sales price. So if you are paying say $230,000.00 for the house, that is what the 2nd mortgage heloc will base your value on until you have house 12 months. Then you can go by appraised value. By having to base it on your sales price you would not have equity by lender standards for a year. Find a lender who does 203K loans. If they are FHA approved they should be able to.
Choosing your choice at :- http://e-loan-online.blogspot.com/
Chances are, you will have to wait about a year to tap into your equity. I would try finding a lender that does 203k loans. If you are able to find a lender to do a home equity loan, it will be after the closing on the home & the interest rate would be quite high.
Good luck!
There is a homework section of the site you might try next time.
49k is correct. If he shops his loan with a broker they can probably get him 80% or more instead of 70%. I am a mtg. broker.
$49,560 minus fees.
Have Ramon call me! :)
Yes, of course, they need to determine how much equity there is.
The factual answer is yes, and maybe. To clarify, your location is somewhat critical. Is this an "in-house" line of credit? Many rural and suburban lenders have relied on equated assessment data and public records for this purpose. Things have tightened considerably in the past 12 months, but numerous larger lenders still rely on "desktop appraisals" completed by the institution and/or loan officer to develop a range of values your home may fall within. You may not see an appraisal in the traditional sense as you envision it, but some mechanism to determine "their" estimate of market value will occur. It's just that lately, it's rarely accurate.
Many homeowners apply for home equity loan for a variety of reasons. While some want to utilize the money to get rid of unmanageable debt, others want to add value to their existing home by restructuring and repairing. Whatever may be the reason, the home equity loan provides a homeowner the quickest and easiest means get extra cash to meet unavoidable expenses.In many cases, lenders are too willing to offer you home equity loan for the simple reason that the loan is secured by your property.
http://www.worldbestloans.com/homeloans.htm
The market is flooded with so many loan products from lending institutions that offer you excellent terms and conditions and leave no stone unturned to publicize their schemes on televisions and print All this may leave you feeling baffled and confused about which home equity loan product to pick. Before choosing which lending institution to go with, make sure to do some research. Shop online to obtain home equity loan quotes from different financial companies.
Well yes they want to know exactly how much the house is worth through research by an accredited professional not just some joe blow.
I would word that differently. An appraisal will be done. And you'll be paying for that appraisal.
So yes.
Yes.......even closer now.........
HELOC stands for Home Equity Line Of Credit, It is a revolving line of credit much like a credit card, the account is revolving for ten years,then converts to a fixed rate loan, A home equity loan on the other hand is a fixed loan for a set amount and is usualy amortized over ten years. hope this helps.
To add from above, all HELOC's can be fixed at anytime. The down fall is that you have to pay both principal and interest, instead of just interest.
Would appreciate if you can answers even one question. I am desparate for good information. Thanks!
Get in touch with a mortgage broker and explain your situation. He/she may know some lenders who will give out equity loans to people with less than perfect credit. Be prepared to pay above market interest rates however. As always, your house will have to appraise for more than you owe on the first mortgage and depending on the credit markets at the time, you may not be able to go up to 100% of appraisal.
It doesn't work. You say you have bad credit, then you say it isn't perfect, then say again it's bad. Which is it? Hardly anyone's is perfect - but if it's bad, you need to improve your credit rating if you want to get a HELOC
It's the same as when you got the mortgage.
Also they will look at your equity. If you have a lot of equity and only want to take a little, it may be a little easier.
