Lending a Hand, Peter Boutell: Refinance upside down mortgage while rates are down Santa Cruz Sentinel
Just when we thought mortgage rates could not go down anymore, they have hit record low levels again this week, and every homeowner should take another look at their current situation.
Homeowners refinance for many different reasons. Some want to lower their payments. Some want to shorten the life of their mortgage. Some want to get out of an adjustable rate mortgage. Some want to pay off a HELOC Home Equity Line of Credit and some want to see how much cash they can create without raising the payments.
While it is true that many of the new guidelines issued by the mortgage industry in the past few years have restricted homeowners' access to mortgage money, there are still some very good programs to help homeowners.
One of those allows homeowners who owe more money than their homes are worth to refinance into a lower rate. Freddie Mac and Fannie Mae have issued a guideline that allows a homeowner to replace their current loan even if they owe up to 125 percent of the appraised value of their home it estimated that more than 25 percent of homeowners in the U.S. owe more than their home is worth.
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Heloc Surprise - Part 2
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is it possible to refinance a heloc without refinancing your first mortgage?
I have a good rate with my first mortage at 4.25 fixed for 15 years. I also have a heloc that is adjustible and is at about 8.5 percent right. I would like to refinance the heloc without loosing the rates on the 1st. Is there such a thing?
yep....it's called a 2nd mortgage
Actually, trying to refinance your first and keep a Heloc is much more complicated. The Heloc lender would have to agree to subordinate their lien.
Are you thinking of refinancing from a Heloc to a fixed rate 2nd? Remember the Fed just cut short term rates, so Prime is already down .5% and more cuts are possible.
You can also try a major bank or credit union. Your rate should have gone down about .50 % with the recent rate cut, but there is no guarantee that rates won't go back up again.
Good Luck
Open Book Advisors
Where can I find the best HELOC rates to refinance my second mortgage?
My current rate is near 10%, and I'd like to find a HELOC rate of prime minus 1%, no fees, and accepting a LTV of 90%
I agree, www.bankrate.com has rates from many different lenders, and links to specific places to obtain loans, like lowermybills.com. the HELOC rates are around 7%, but I'm not sure if they will allow an LTV of 90%.
http://www.bankrate.com/brm/rate/brm_loansearch.asp
Out of all of the banks that I have worked with, I find that CHASE, WELLS FARGO, and US BANK offer great rates and very low hassle.
So like I say, what you are going to do with it, should play a factor in selecting the propor HELOC.
Pen Fed CU regularly has extremely good rates on both HELOCs and regular home equity loans.
https://www.penfed.org/index.asp
You won't get such terms as prime minus 1% on a 2nd mtg either, have you thought about what's the avg. rate you are paying for BOTH your 1st and 2nd mtg.? Consider refinancing and consolidating both mtgs into one.
refinance HELOC or pay additional to principal each month?
I have 28 yrs remaining on my first with a balance of $150K @ 5.75% fixed. Payment is only $1100.00/month. My problem is my HELOC now maxed out at $44K @ prime adjustable. I understand now this is basically revolving credit line and that SUCKS. It's not really hurting my credit score (760). But the $300.00/month payment they want is only paying interest and this will never payoff. I'm planning on staying in this house 3-5 years and its appraised at $230K. I make approx $90k/year and figure I can afford to pay approx. $2k/month without a problem.
My best thought was to pay an additional $700.00 to principal on HELOC every month. This will elinate the bad loan in approx 5 years while allowing me access to funds paid back and not committing me to a big monthly payment strictly if emergencies i.e. loss of job occured. It's still a good rate and tax deductible and I don't think I can beat the 5.75% fixed first. When I do pay this off I then plan to continue paying $2k/month towards first.
That sounds like a good plan with no flaws. Possibly another way to look at it is to take the weighed average cost of interest on both loans, which comes out to about 6.3%. If you think you can get a fixed for less than the 6.3% then you should consider it. Ultimaetly, I think the market is pretty close to the break-even rate, so it may not be worth the hassle. In terms of flexibility, I think you could refi and still have a heloc outstanding, thereby having it as ammo if you need it (just don't get into the same sitiuation again). Your monthly payments by refi-ing should not increase too much (about $300 at 6.5% at 30 year fixed)., so it does not make the payment jump to super high levels.
Here is my suggestion: Set up a sinking fund with that $700 monthly. Use an exchange traded fund that you are comfortable with and that pays more than the interest rate on the Heloc.
you can go the this site to screen for the ETF you would like, and perhaps select several. www.etfconnect.com.
Building equity in your home is similar to building equity in another type of account.
Both carry risk. With an ETF, you can spread the risk. With your home equity, you are subject to local market conditions at the time you choose to sell.
The rate on my HELOC is really high. Can I refinance just the HELOC if my home value has dropped?
Nope. Dont forget that the HELOC is a second trust mortgage. So the home equity line is calculated based on the available equity after the first trust mortgage. If you refinance, you may not have suffcient equity hence your rate would most likely stay on the higher side given that the deteriorating value makes you a higher risk borrower.
Also, dont forget that there are costs associated with a re-fi and they may negate any savings as a result of a rate reduction.
Keep in mind that every time that you check your credit or apply for financing, your credit score may drop one or two points. That's why it's good to "shop around" within a 30 period so that it counts as one time.
Ofcourse the primary condition is that your home value should be greater than your mortgage that you owe.
Based on certain conditions (like, reduced Debt to Income Ration, Increase in your monthly income, increase in your home value etc) your existing terms may be modified by
1) Reducing your interest rate only
2) increasing your line of credit only
3) increasing your line of credit by marginally increasing your interest rate.
Call your lender's heloc modification department and they will be able to guide you from here. You don't have to pay anything..may be a marginal fee which would be less than $200
If you're upside down, NO.
If you're at a good safe LTV then probably yes.
The thing is that Seconds are much harder to qualify for today, but rates have been dropping on Prime, which your Heloc is tied to, so your rate should have been dropping too.
Just call up US Bank or Wells Fargo and have them see if qualify, they'll do a second for FREE.
Should I refinance current mortgage w/ a 2 Part HELOC & will it's structure negatively affect my credit score?
Over a 15 yr period, does it hurt a credit score to have a 2-tier HELOC product whose 1st mortgage (refinance) is being paid down consistently, BUT the equity gained is immediately & automatically being transferred to the HELOC revolver (emergencies) to incr. the revolver’s credit limit? This 2-tier HELOC linking process (term loan & revolving loan) would cause my ‘potential available debt ’ to remain at the same level for the entire 15 years & perhaps affect my credit score. For example, if I borrowed $68,000 over 15 years comprised of $60,000 (HELOC refinancing first mortgage) & $8,000 (HELOC revolving/misc), then throughout the loan's history the $68,000 would be recorded as my maximum potential available debt on this loan. And, although each month I would be reducing the balance on the HELOC term portion, the equity gain is really just a redistribution of debt, b/c now my revolving line is increased. Eventually, the revolver will be $68,000. There are no closing costs just $50 each to lock both traditional and revolving portions, and $50 annual fee for revolving portion beginning in year two. And the current lock rates are 5.875% traditional portion and 5.75% revolving portion
heres a list of few things that do affect your score..
- late or no payments
- minmum aren't great either i always suggest to make more..
- many credit check in short period of time by creditors offcourse (you yourself can check as many time as u want) the reason it lowers is that you lose 12 pts every credit check so if for exemple if for your increase of homeequity loc they have to go wit full apl than yes it would, but on home equity because its secured debt it shouldnt..
- too many loans credit card..(debt ratios is high)
this is not exactly a direct answer to you in specially but it should help a little
Try out the following site it is packed full of articles, tips, resources and links you can use for all of you’re mortgage needs.
Thanks
http://www.good-mortgage-advice.info
I used "Credit Solution" to settle my debt and improve my credit score.They managed to reduce my debt up to 58% .It's legitimate.I came across this company on NBC News Special Edition.Check it out here:
http://yatuc.com/bid
HELOC refinance. Good move or Bad move?
I recently had a HELOC for $62,000.00 at %8.250 interest rate. (variable). I recently got an offer to refinanced to a %7.5 interest rate.(30 year fixed) I plan on taking out $10,000.00 to do some home remodeling. So now I will owe the bank $72,000.00. I would like some advice or comments If that was a good move or not.. Any comments or advice would be appreciated. Thanks
As a mortgage broker who does a ton of HELOCS, I can tell you that 7.5% is a great rate... make sure it's not some kind of teaser rate that's only good for the first few months...
You are likely not paying closing costs... if you are, you need to find out why because with good credit and some equity left in the property, you should be doing getting a no cost home equity loan.
The only thing you should think of before you go ahead with this is to see if it would be benificial to refinance your entire mortgage... That would be likely at a rate in the high 6's and would save you from paying extra interest.... however if you have a really good rate on your first, leave well enough alone, take that 7.5% and run with it!!!
If it was just to refinance, then the answer would be no. the reason is there are transaction costs for refinancing - closing costs, points, deed recording fees and the like. You would need to keep the mortgage for at least 8 years to make a 0.75% interest rate reduction even break even, and most people sell their proerties every 7 years.
But again, if the main reason is the $10,000 then it is borderline okay.
Interest-only HELOC, should I or when should I refinance primary mortgage?
Please explain how refinancing could help my financial situation.
Recently bought a house for $310,000, appraised at $350,000
Put 5% down, $15,500
Borrowed 15% from my Dad, $46,500
Will take out a HELOC, 90% loan to value ratio (prime 5% plus 0.5% interest rate), $67,000 (but will use $61,200 to pay off my dad for 15% down and closing costs). HELOC will be paid off interest-only (roughly 279.85 a month) for now.
Please explain refinancing and how it works, and how it would help me within the next year or two (I do not want to refinance if I already have more than ten years in my house). My concern is to pay off my dad in one lump sum and be able to pay off my HELOC principle in the future. Please advise how I can pay off my HELOC via refinancing or any other mode without straining my financial situation.
Keep in mind a HELOC is a variable rate and will inevitably go up as the FED probably wants to keep oil prices down more than real estate so they will not lower interest rates anymore . Look for a rise or they will spin anything on a turn in the economy like people currently buying foreclosure with multiple offers, yeah this month in May 08'.
to be come debt free look at a debt free calculator in the source below.
refinancing your mortgage or LOC may be best with taking a fixed rate 2nd or 1st mortgage in the 5's . Also, see if you can rent a room out or make a guest unit for a renter to pay your Dad back faster....yes, it's a thought..I know. But since most people see their disposable income decreasing I notice more folks renting out space in their larger than avg homes.
I have a HELOC with TechCU currently. I got a call from them asking me to refinance at the same rate.Benefits?
If I refinance, they would give me a promotional interest rate for 3 months. Does it make sense to refiance?
Probably not.
Most HELOC's come with a $500 cancellation fee if the loan is closed (sold, refinanced, etc) in the first 3 years.
Even if they refinance you at no cost to you, you will have lost whatever principal balance you've paid down in the interim.
Basically, you would have to save enough money during those 3 promotional rate months to offset all your costs. (And if you have that $500 cancellation fee, that won't be too easy)
refinance or heloc?
Hi.I have a home valued at about 235k(bought in 8/07).Balance on current mortgage is 203k.I used a VA home loan with fixed rate of 6.6%.i want to consolidate or pay off hi-interest cc bills totaling about 14k-accumulated from grad school(now finished); and also make some minor home improvements.fico score is fair.staying in the home for at least 7 yrs.should i do a cash out refi? or get a heloc? or just refi?
i've read about a va streamline refi. can i do this and also do a heloc for my cc and home improvements?i mean like maybe separately with maybe 2 different lenders?
Well you're currently paying PMI, correct? (As your loan amount is more than 80% of the home value, I'm assuming this).
If you Refi and pull more money out, you'll be paying a great deal of money towards the PMI, money you'll never see returned to you...
What do I mean by all this?
A 30 yr fixed (again I'm assuming) is a closed amoratization loan. Your monthly payments on this home are first going to the monthly Interest accrued; then the small portion remaining goes towards your balance.
If I had to guess, I'd say your monthly loan payments are 1300-1400 a month with an extra 175-200 a month paying your mortgage insurance. Am I in the ball park?
The first month you paid this $1600 or so and had about $250 go towards your principal. The next month you had roughly $251 go towards principal and so on. So in the 6 months since, you've paid down maybe $1500 of you loan balance. You paid 9k to the bank to pay off 1500...
Until your loan balance hits 188k you'll have to keep paying your mortgage Insurance (PMI).
So, the current 15k that you'll have to pay off will take most of the 7 years you plan to live in this house.
If you refi and pull out another 14k you might get a lower interest rate (if you can even get a bank to loan you money up to the 93% LtV ratio), BUT your PMI will be recalculated higher, your monthly payment will be recalculated higher, AND your ammoritazation schedule will restart, meaning less will be going to your principal and a longer time you'll be paying your PMI.
Not something I'd want happen to me...
IF, IF, IF you HAVE to do something about these credit cards and can't pay them all off now, get yourself a HELOC and pay it down as fast as possible.
Then you have afew options like paying a chunk of your principal down via your HELOC to get out from under the PMI faster, but that's a more advanced topic for ater conversation.
My BEST advice...
Just pay the cards off as much as you can. Make the minimum payment on three out of the four and pay the highest one down as fast as possible.
Refinance primary mortgage with a HELOC?
I am at about 65% LTV on my single family home. I only have a primary mortgage. The mortgage is a 4 year balloon at 4.4% that I must refinance in October. I am considering just taking out a home equity line of credit rather than refinance a primary mortgage. I have not really heard of this being done but it might make sense for me. I like the idea of my amortization resetting every time I make a principle payment. If I come upon a lump sum of money, I will just pay down the HELOC and my monthly payment will be lower. I can wipe out my savings to pay down my home because I will always have the line of credit available in case of emergencies. Any advice as to why this is / isn't a good idea would be appreciated. Thank You.
If you did that you should do a home equitity loan that has a FIXED interest rate. A HELOC is variable and will adjust upward as interest rates rise. And they will rise soon after the election. The Federal Reserve is keeping rates low for now during ths election cycle. After November expect rates to move upward till they hit 1982 - 1984 levels again. Were looking at interest rates of about 22%. One contry Austrailia is already moving in that direction.
refinance or heloc - News
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Industry Insider Tips from Residential Finance Corp: Clean Up Your ... - Business Wire (press release) Industry Insider Tips from Residential Finance Corp: Clean Up Your Your home equity line of credit (HELOC) is considered a revolving credit debt. Don’t rely on HELOC for long-term debt. Keeping your balance high and paying |
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Should you Pre-Pay your Mortgage? - Real Estate News | BiggerPockets.com Should you Pre-Pay your Mortgage? Completely ignoring the tax implications for now, let’s say that you are paying 7% on a $100000 interest only loan (as most HELOC’s are for the first 10 Because the economy stinksand When The Economy Stinks |
Click Here For An Emergency - Asbury Park Press
Asbury Park PressClick Here For An Emergency HELOCs, which the insiders call them, have a much lower interest rate than credit cards. And it is easier to get approved when you are employed.
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How to buy with little money down - OCRegister How to buy with little money down Should I refinance? A. Molly, the reason Wells Fargo may have frozen your HELOC is because their perception of your equity, not necessarily accurate, |
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Home Equity Line of Credit - Maui Weekly Home Equity Line of Credit Home equity loans, or HELOC, can have limits placed on them by lenders. Those limits are justified by lenders, who argue that declining home values make a |