Home Equity Loan
80/10/5 Home loan - conver to Home Equity Line of Credit?
So, in a nutshell, i bought a new home 2 months ago (it closed 2 months ago). The loan is structured as an 80/10/5 loan. The home was purchased for 460K. $368,000 is on the 1st (at 5.625), $69,000 is on the 2nd (at 8.25%). The balance came from my down payment. The house appraised at 555K at the time of purchase and that's what the lender went with for our home valuation. SO, with that said... i have seen home equity line of credit offers at the 5-6% range and would like that on the 69K instead of what i have now. Is that generally a possibility to get one to pay off a 2nd just 2 months after we bought the house? I ask because not only do i want an interest rate reduction but I also want to remodel our kitchen a bit so would like to cash out 15 grand worth. So, any experts out there that know the ins and outs of this? BTW, i bought a Bank-owned REO property in California if that matters. Whoops, i messed up, i said 80/10/5. I *should* have said 80/15/5. My apologies =). Thanks for catching that
Public Comments
- your numbers to add up. was it a 80/10/10 or 80/15/5. The number need to add up to 100%.
- I'm pretty sure you can not refinance REO properties for three months, at least in the contracts I have seen. You should check you addendum the bank had you sign with your purchase agreement, it will say how many months you have to wait to.
- usually for cash out - you wanted some money for kitchen remodel, lender would like you to be on the title for min. of 6 month. you can refinanced your second mortgage without touching your first mortgage (in most cases, because sometimes the first lien holder will not give permission to do this) i thing that it is worthy to try- go to your local bank and ask them if they can do it and of course i will ask your current lender if they can refinance your second mortgage.
- There is no rule about not refiancing an REO for 3 months. I think the poster is confused with the flipping rule. Your current 2nd is probably fixed so even thought the rate seems high, in the long run I doubt a HELOC would be better because it is probably adjustable.. $555,000 may be what the lender went with for your appraisal, but your sale price was $460,000 & that is what your figures add up to. It is always lowest of sale price or appraised value that is used. If the house did appraise for that much your best bet may be to do a cash out refinance, paying off the 1st & 2nd & getting a new 1st only. The regs are changing daily it seems, so do it quickly & good luck with this.
