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Advice Needed ? Refinance or Home Equity?


CreditDiva
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Trying to do some reasearch and figure out what I should do. Need some advice as to whether I should re-finance or get a home equity loan? I have a 55K mortgage left on a home that is valued at 240K, my credit has not been perfect when rates were low, so I never bothered to try to re-finance, and my current % is 8.5, my scores are now in 680+ and early 700's. I would like a) lower my current mortgage and b)purchase a second home and rent out my first home. What way do I need to go? I have been told based on my income alone I could get approved for a 300K mortgage,have about 19K revolving CC debt, and no car loan(paid)

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A problem with doing a full refinance is that you will be signing a paper that says you will live there for a year. Otherwise the loan can be called and you would have to refinance.

A solution would be to get a fixed second, rate would be decent, and would not go up much, and you could get the 2nd loan for up to 100K.

Then purchase the other home with part of the proceeds.

If you were going to stay in your current home for a year, then I would suggest that you refinance your loan in to a better rate, and take the case out at that time.

Charles

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Ok...I travel a lot for my job, so if I refinance and stay for the year or not dispose of the property for a year , can I go ahead and use say some of that for my deposit on the second home, and rent that out until I can move..will that pre-clude me from obtaining this second mortgage

or if I go ahead and apply for the fixed second, rate up to 100K, I would want to take that and apply for my deposit down on my second home..how do I get my rates lowered on my first mortgage and will it affect me getting a mortgage on my second home, as it will be in a different state

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Yes, you can purchase a second home, and the rates are either the same or just a little bit higher, depending on the loan program you go with.

To lower your rate on your first, just do a refinance. I would do it soonest, get a 30 day lock on the rate, as conventional rates are just going up every day (well almost) Since most people either sell and purchase another home; or refinance their homes every 5-7 years, I always suggest that people get a 5 year ARM. In your case, I would suggest that you look into an "Option Arm" and go the 5 year rate.

Charles

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