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Should I Refi or Home Equity?


theartistchick
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Hi, I came here last year. After I lost both my parents, I had inherited my family home. I had to take out a first on the house for 150,000 at a ridiculous rate (10.5%) because our own home was in foreclosure and we went stated income ( we turned that around) Anyway, my H and I have been in business for 11 years, our credit is still poor but we are working on it ( low 500's)

Now I need about 10-20,000 to float us through the next few months while our business is still recovering-

Should I wait 2 months to refi? ( the orignal loan can't be refied till Feb) or can I just take out a small second or line of credit> I have over 350,000 in equity. I just don't want to get screwed again. Last time I was backed into a corner on the rate because of our situation.

B of A just turned me down for a home equity loan ( because of our score), and I really need to get some $$$ comfort level until our business is up back to par. I expect to improve the credit score within the next 6 months..... Advice anyone?

I want to make a wise decision.....

Thanks!!!! :?:

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Lowest score I know of for a 2nd mortgage are 575 and your debt ratio would have to qualify, otherwise it's a 600 or 620 for stated income. Since you have so much equity, and if you really need the money now, you might want to look into a hard money lender who does 2nd mortgages - rates would be around 12-18% but it'd get you the cash.

Do you have a prepay on the loan and it's up in February? If so what determines when the prepay is up, the date of funding or the date of 1st payment? (you can call your lender or read your prepay penalty rider to find that out). Keep in mind refinancing normally takes about 2-4 weeks so people usually plan by starting ahead of time - as you might have a rate adjustment soon after the prepay penalty is up.

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