Is a Cash-In Refinance a Good Idea? NASDAQ
Does it make sense to pay down your mortgage in order to be able to refinance at today's super-low rates? Is this a good strategy for homeowners who are underwater on their mortgages?
A lot of homeowners seem to think so. According to Freddie Mac, over one-quarter of all mortgages refinanced in the second quarter of 2011 were "cash-in" refinances, where borrowers paid down a significant part of their mortgage balance as part of the transaction.
At first glance, a cash-in refinance is a fairly straightforward solution for borrowers who'd like to refinance, but can't because declining property values have left them owing more on their mortgage than their property is worth. But it tends to be expensive. To get back into positive equity, underwater homeowners may have to write a check for several tens of thousands of dollars, if not more.
Generally, you don't want to do a cash-in refinance unless you're certain it's the best use of your money. Here's some of the main things to consider when deciding whether a cash-in refinance makes sense for you.
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Unique situation... Refinance and cash out to down for a new home?
I own a 2-family home worth 370K. I still owe 88K with 12 years left on a 15 year loan. I owe a family member 200K in loan. I need to pay the family member back now. Can I (should I) refinance for the value of the home and pay off the family member with it? Basically, I'm moving from a non interest family loan to a mortgage. I know that, financially,it's a disastrous move, but the situation is what it is. Also, if I wanted to buy a new home and put this one up for rent...would it be wise to refinance for, say, 320K (200K goes to the family member, 88K for the remaining mortgage, and 32K cash out to down for the new home)? So in the end I would have one two-family home up for rent and a home I will reside in. I'm hoping the rent from the two family home will cover the new 320K 30-year mortgage and my income 126K/year (gross) will cover my primary home's mortgage. Which leads me to another question, at that income level, how much home can I afford? Thanks to any advice anyone can give!
$320 PP
$32K -down 10%
$288 @ 6.5% PITI= apr. $1700
You will have to rent each unit for about $850 minimun. Can you get a rent rate of $850 per month for each unit?
As far as for what you can afford. Based only on income level you can afford a house $380,415 purchase price.
got to:http://www.bloomberg.com/invest/calculators/qualifier.html
There are a few more pieces of information that I need from you in order to place you in the best possible program! E-mail me with your scenario as well as your phone number and you and I can decide which route is best to take! I look forward to hearing from you!
Cash-Out Refinance or Second Mortgage? If Second Mortgage...home equity loan or HELOC?
My 2-family home is valued at 375K. I have 12 years and 88K on it left. My current loan is at a 4.9 interest rate. I need to borrow 220K and need it in lump sum. With todays rates being around 6.5 for a 30 year, I know refinancing is out of the question. Which would be better for me, a HEL or a HELOC? What would my payments be for 30 years, 15 years? Thanks
look the best interest rate you will get is a fixed rate at 30 year if you can not afford this rate, you will get crushed with a home equity or other second note, they are variable and rates are not coming down but going up, after the teaser rate period is over you are going to get whacked almost double the payment, so when looking at a home equity read the fine print, see how long the teaser rate last and figure what ever your payment is double it once the teaser period is over
for 30 years it is $1,391.00.
I have a HELOC. At my bank it is 1 point higer than a HEC for 15 years.
If I refinance my home to cash out equity and end up foreclosing in the future, what can happen to me?
I like many others am in financial trouble and am having problems paying my mortgage.
I'm thinking about refinancing my home (for no more than it's current market value) and taking my equity so I can pay off my car and a credit card.
If I do that, and still end up facing foreclosure in the future - what can happen to me besides having my credit ruined?
I live in Arizona - the law here states that - "A lender may not bring a deficiency suit against a person who lost a property that is 2.5 acres or less at a foreclosure provided the property is a single one-family or a single two-family dwelling."
I fall into that catagory. Basicly, I'm wondering about future pit-falls if the worst case scenerio happens and I do end up foreclosing after I do a cash-out refi.
That is not the law here in Texas but it sounds like you will be OK there except....if you do this and somehow they can tell you planned it all along...I bet that falls into the category of defrauding a bank (bank fraud).
If you innocently have hard times though, your credit is ruined, but it doesn't sound like you can have a deficiency filed against you.
The federal government is discussing passing a law that might protect you against the "phantom income" problem. "Phantom income" is when a mortgage company turns any shortfall into the IRS and you owe taxes on that amount of the mortgage you didn't pay back.
There is often a clause in mortgage applications and the promissory notes itself that require you to notify the lender of any condition that may tend to make repayment of the loan more difficult in the future, or words to that effect. So, the fact that you say you "are in financial trouble" and "having problems paying your mortgage" but you think you will be approved for the refinance loan, make me wonder if you are thinking of not disclosing material information to the lender.
Don't do that, instead, contact the lender and try to work out a better deal. You don't want fraud in your background, that will hamper you for a long long time.
Basically the only thing that will happen to you is when the bank sells your home for less than is owed, you will get a 1099-S from the lender for the difference in what was owed and what the bank could get for the property.
If you can prove financial hardship, the I.R.S. will forgive the taxes owed.
Hope this helps.
Terry S.
Http://www.Welcome2Arizona.com
P.S. Be grateful you live in Arizona! Many states DO NOT allow the homeowner to walk away from their property without paying the bank back what they lost on the foreclosure sale.
If you are having difficulty making the current loan ,
There is a snow balls chance in helll of them letting you have a Larger Loan .
So all of this is probably just fantasy on your part .
Maybe time to get a 2nd job for awhile to get your $$$$$ issues on track ?
>
I seriously doubt that law exists in Arizona because if it did, banks would refuse to underwrite in a state that basically takes away all legal recourse.
If you need cash, what would be better? To refinance your home or to get a second mortgage?
Is there such a thing as getting 100% of what you have in equity in your home? I need an expert PLEASE
It really depends on your credit, how much equity you have in your home, and how good your current loan is.
For example if you have a wonderful mortgage with a nice 30 year fixed rate of 5% it would probably be a mistake to lose that to refinance at a higher rate.
But if you have a mediocre mortgage you may well be able to do a refinance that gets you the money you want, and secures a better rate for you.
You need to go an see a mortgage banker with a great reputation (not just some loan officer in a bank) and examine all the options.
There is nothing wrong with either option you suggest, but your credit, your equity, and the details of your current mortgage will determine which is the best way to go.
If you take a equity loan out your interest rate will be at a much higher rate then a refi.
A second mortgage will be anywhere from 9 to 14% if not higher, as to where a refi will be around 6-7% right now and depending on your credit you might be able to get it lower...
Check with your financial institution.
See bellow the website source for more information.
Check out the source website for a pre-app for Hamlin Morgage, licensed in 48 states.
Typically, how long must you own a home to do a cash-out refinance?
I am planning on buying a home that needs a lot of work. I also have some credit card debt I would like to get rid of. I have the 10% to put down and have been pre-approved for a mortgage.
If I buy this home, can I then turn around and do a cash-out refinance for, lets say, 80%-90% of appraisal value? Would I have to wait a certain period before a bank would do this?
Once you get the house back into good shape, and the value is back above where you financed it in the first place you can get it reappraised and start over on your new loan for the unit. Or get a second mortgage.. Time factor is not a big deal,, the equity in home is the deciding factor.
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if i take out a home equity loan now will this loan affect me if i want to refinance my mortgage.?
I have 24 years left on 30 year mortgage. I am thinking about a home equity loan at a favorable rate, rather than roll in to refinance consolidation. If rates are favorable later this year i may like to refinance 1st mortgage at 15 years. Will home equity loan affect my refinancing even if i am not looking for any cash out.
Right now rates are LOW, I would just refi instead of the HELOC that might cost you 7% on up. Why pay for 2 transactions.
Note: as the year goes on, it's possible that the value of housing may decline some (negating some of the equity you have), and if you go from a 30 to a 15, then your higher payement will bring your debt to income ratio up - which means that your loan won't look as favorable to take advantage of the best rates offered, which may make that waiting game not so good an idea.
best bet, make an appointment with a mortgage lender that has the tools on his/her desk to run the numbers though the scenario and find the best solution for you.
Some people talk about pulling $$$ out of a home after it increases in value with a refinance.How does it work
Ok Guys, Im new to this whole home buying thing, but I just have a question because I hear about it all the time. When someone refinance a house after a few years, they get a lower rate and they have amassed a good amount of equity both from paying the mortgage and from increases in home value. If they refinance, how do they pull out cash from the refinance and still maintain the same payment, sometimes lower?
Lets take this scenario: $620000 home. $400000 mortgage for 30 years @ 6.5%. After ten years the home increases to $1000000 and balance on mortgage is $340000. Lets say after the refinance the rate is 5%. I know the new payment for another 30 years would be $1825/mo but "how and what would they be able to pull out"?
Can anyone explain (in lamens terms)? thanks so much!
Well. There are a few questions that I think you are trying to figure out here. 1-what a refinance is and what they talk about when they mention the word refinance 2-what will you be able and how to pull out of the re-fi.
*A refinance is essentially a re-structuring or if you wish, taking on a brand new mortgage arrangement different from your present one. Typically, people refinance for getting MORE money out of their house through the HIGHER mortgage due to increase in the value of their property. In you case, you are at ~66% loan to value of your house (forgive decimals...), that is you ALREADY have 100-66%=34% of equity in your house. With your house price going up to 1Mill and the mortgage balance being at 340,000, your equity increases to 66%, i.e. reverse of what you have now except that you now "OWN MORE" of your house than before. Here we are logically arriving at answering question number 2, i.e.
**Should you property increase in value to 1 Mill and your mrtg balance being at 340K, you can go back up to the Loan to Value that you currently have, that is to 34% of equity in the house. So, doing simple arithmetic: A/34%*1Mill=340,000. B/1 Mill-340,000=660,000. This is the amount you can refinance to and "pull out" 660,000-340,000(mrtg balance then)=320,000. Your 320,000 will be your new money you could potentially invest into another property. The only caveat that you should be carefuly here is the potentially (!) lower rate on a re-fi. Yes, if rates go down in the market and you are able to fetch an awesome broker's deal, then possibly you might end up with 5%. Again, typically, on an INcrease to your mortgage balance (remember: you were at 340K and now at 660K), the rate may be blended between what you have NOW and what the new rate on a new mrtg term and balance gonna be. It is highly probable your rate will be either:
A/ lower than 6.5% now IF rates go down and you are able to find a better deal at the lower rate then
B/blended HIGHER if the new rate on the new funds to be added is generally higher due to market conditions
C/ blended LOWER if the new rate on the new funds to be added is generally lower due to market conditions
Anyhow, you need to do some shopping and what I call "thorough explanation meetings" with those people you are going to talk to regarding your new 660K mortgage then. Who knows, eh?
You pull the money out on the new 660K mortgage by simply getting a new type of a mortgage when the old one will be paid off (with a balance of 340K) and the DIFFERENCE will be simply deposited (by the new lender providing the new 660K mortgage) to your bank account.
Uff, I even got tired typing all of this fo ryou...Hope that helps...:-)
Is it advisable to get a Home Mortgage at prime minus one for 4 months and get 5K Cash back?
My lender is giving my 5K back for a mortgage of prime minus one for few months and then he will refinance. He says that I will get huge incentive and then he will refinance at almost no cost.
Any comments or suggestions... ?
Will he guarantee all this in writing? I suspect not, so if he won't walk away.
i have owned my home since Sept.i paid $35,000 for it. can i refinance my mortgage on it now?
i need to know how long i have to own my home before i can either refinance it and get cash out, or should i take out a second mortgage on it?
do you have equity? If so they'll let you get into it. If youre doing this out of desperation for some reason, dont risk your primary residence.
Just purchased a home, and mortgage broker said we could refinance in 30 days. I need to know how that works?
We need about $10,000 to pay off some bills. I want to either get cash to pay off bills, or for all my bills to be combined in one payment along with my mortgage payment. Is that possible? Do they go on how much your home is worth? thanks for any help..
Some lenders go by the appraised value but many go by the purchase price that you purchased the home (since it was so recent that you purchased) Did you purchase with 100% financing? Then you will need to find the lenders that go by the appraised value. Since it sounds like this is your primary residence it may be easier to do.
If you guys were satisfied with what the broker did the first time around go back to him since he suggested it he may know of a lender. Shop it around so you know you are getting a good deal. Make sure to tell the lenders you just purchased when getting a prequal - it will make a difference to what programs you qualify for. You may want to consider a fixed rate second mortgage - the rate may be a little higher than a home equity loan but at least you know its not going to change on you. I may be able to help if you are in Florida.
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