Home equity loan?

Question

My fiancee and i just seetled on a new house. We have a lot of debt and i was wondering how long i should wait befor taking out a home equity loan to pay off the debt and get a better, more consolidated monthly payment.

Answer 1

by rule (loose rule) you are going to want to wait 12 months before refinancing. The lender will look at the purchase price of the property as the value for the first 12 months instead of the appraised value. Unless you put a significant amount of money down when purchasing the home, you will not be able to pull a significant amount of money out of the property.

From what I can tell, your credit is not at its peak right now, I would avoid having your credit ran and just wait it out if possible. The absolute best thing to do in these situations is to seek personal financing through a relative or friend who will be willing to consolidate your debt into one payment. Your credit score will go way up over the course of a year and then you can get the home equity loan to pay off the relative or friend at a competive interest rate.

Answer 2

There are several factors to this. First you have to have some equity in the home.
then you must find a lender that has no seasoning on title. No seasoning on title means they do not care how long you have owned the property. Some lenders will only go off the purchase price if you have been in the home less than 6 months. I have many lenders that will go off a new appraisal regardless of how long you have owned the property. So if you bought a home with 25k in equity, you could take out a HELOC on the home.

Also, depending on the state most lenders will cover the small fees associated with a HELOC( most require you to keep it open for at least three years or you have to pay back the small closing fees) Any money coming off the top of your loan is going straight to the Loan Officer. HELOCS take about an hour to work up and most lenders will pay the Loan Officer a set amount (not YSP)on the back end. I myself do not charge any origination fees to do a HELOC. They are simple to do and I just don't feel right charging on the front. Plus they are an added benefit for my clients that I already work with.

Answer 3

Do not wait because values are coming down and you want to make sure you get the most you can on your Home Equity Line. Traditionally you would wait 12 mos, however, you would want to use your purchase price at this moment.

Some advice: They now have HELOANS, so they're the same benefits as HELOCs in that you can draw and not have a payment if you have a zero balance, but, the rate is fixed.

I just locked a loan at 7.44% and normal HELOC rates are prime plus a margin. Since prime is at 8% and rising, you don't want a payment that is going to be 15% in the near future...

Good luck!

I am also a broker and licensed in 48 states so let me know if you need any advice! [e-mail]

Answer 4

Don't automatically assume that you should take out a home equity loan to pay off your other debt. Take a good look at where the debt is concentrated. Is it in credit cards? While using a home equity loan to pay it off may give you some tax deductions, keep other things in mind, such as the cost of taking out the loan. Also, realize that once you take out a home equity loan for this other debt, you are essentially putting your house up as collateral. If you later have trouble paying your bills, you could potentially lose your home with a home equity loan. This is not the case with unsecured debt, such as credit cards.

Answer 5

If you roll your other debt into the the home, you have lengthened you payments. Not unless you stop accumulating more debt.
Can't keep rolling your short term debt (like groceries) into your long term debt instrument (home equity) or you will be paying off that filet for the next 15 years. I would work on paying off short term debt now as soon as possible and not accumulate any more. Use the equity in your home for a rainy day

Answer 6

Do it as soon as you can. I don't know what kind of debt you have or how much, or how much equity for that matter. But...

You should consolidate to lower interest rate financing and pay off certain debt as fast as possible (e.g. credit card, other high interest).

An HE rate will very likely be lower than credit card or car debt (assuming you don't have a 1.9% or 0%). Plus interest on HE is tax deductable (in many cases). Check with a tax advisor on deductability.

That said, if you do consolidate your debt-- you also have to be dilligent about not racking up alot of new credit card debt (if you have it today). Otherwise, you'll only be a deeper hole.

Answer 7

Cab I take out a home equity loan to clear some trees from home due to trees are costing me more money to keep.

Answer 8

The difference between your home loan and the property value is your equity. Banks have their own appraisers so they can appraise higher than their true value. This is one of many fees you will pay. Keep in mind that banks make their money off your loans so they may approve a loan knowing you can not pay it back. Therefore, you can apply at anytime. But please be careful.

Answer 9

Depending on the equity position you have in your home, the amount of funds your looking for and your credit score I can assist you with a home equity loan or line of credit with a low closing cost product ($225-$250 depending on your state). The lender covers title, escrow, appraisal etc... Yes, thats it... $225-$250

Drop me a line and we can discuss your specifics.

Kevin 866-562-6838 x 106
[e-mail]
www.firstratelending.com

Answer 10

wait at 6 monts to build equity in the house.