Share ideas on refinancing 2nd loan Home Equity Line of Credit?

Question

Existing mortgage: 80-20. No equity. 1 year since purchase. 2nd loan home equity line of credit has variable APR. Please share ideas to refinance 2nd loan and also consolidate other loan.

Answer 1

It's a bad time to refinance or consolidate with interest rates going up like they are. If you are having trouble making your payments, go to the lenders and tell them - tell them whatever they want to know, answer all their questions truthfully, and ask them to assist you in doing something to make those payments manageable. You have nothing to lose (because if you are having trouble making payments they'll already be aware of that) and everything to gain (banks and mortgage companies don't want to "own" a bunch of foreclosed homes, believe me. It's no easier for them to sell them than any other seller). I wish you the best of luck

Answer 2

The best solution I can give you given that your HELOC is variable and you have no equity available to consolidate both loans is to refinance the second loan into what is called a HELOAN.

A HELOC is pretty much like a credit card secured by your home therefore you have a credit limit which you can use and repay as much as you want. The drawback on these loans is that the interest is variable than the way the Fed has been increasing short term rates I would DEFINITELY suggest you fix that rate as soon as possible.

A HELOAN works as a normal mortgage where you only take out a certain amount and that is it. All you can do is repay it because its it not a credit line, its a true loan and the benefits for this type of loan is that the rate is fixed for a long time. The only drawback for this type of loan is that the rate is a bit higher than a HELOC.

Here is an article I wrote about HELOCs hope it helps
http://jrealestate.blogspot.com/2006_04_01_jrealestate_archive.html
It is titled "HELOC = Home Equity Line of Credit"

Answer 3

I love the hostility towards the mortgage industry LOL Hi, I am a certified mortgage planner. A refinance loan is when you refinance the first (and if you have one a second lien) into a new loan. I have to demonstrate something called Benefit to the Borrower to do one. IE, lowering interest rate, going from ARM to fixed rate mortgage, lowering overall payments etc. The rules to refinancing have changed in the last 6 months, drastically. The main reason to refinance right now is if you are in a ARM and can move to a fixed rate mortgage, the rates are very comparable right now. But I couldn't say whether they will stay that way. Home Equity Loan is a second lien on the property. On title it comes after your first. I have never seen an ARM on one of these. They are usually fixed for a term of 15-20 years, sometimes 30. Home Equity Line of Credit is obtained from a bank. It is a line of credit that can be a fixed or adjustable rate. As you pay own the line, you have access to it again. It is sort of like a credit card, but the collateral is your home and if you don't pay it the consequences are huge. They are usually available to you for a specific time ie., 10, 15 or 20 years. IF you have more questions, please feel free to contact me. As a CMP my goal is to be a resource and tool for people. Good luck.

Answer 4

There are many loans out there can do 100% loans with out MI. Depends on your interest rates as well. Fixed second can be better than your equity line. Have you had an appraisal done to know that you have no equity? If you are on an interest only there many better programs for you that may lower your payments even. Let me know if you want some options.

Answer 5

Contact a mortgage broker in your neck of the woods. There are some new(er) loan fixed second loan programs to replace HELOCs.

Regards

Answer 6

rates going up and no equity. avoid it like the plague

Answer 7

CALL A CREDIT UNION. THEY CAN DO MORE FOR YOU THAT A BANK. MORE LIBERAL LENDING AND DONT LIKE TO BE LESS THAN FIRST MORTGAGE, SO THEY ARE MORE LIKELY TO REFINANCE AND WRAP THEM BOTH UP.