What is the different between loan,refinancing,home equity?

Question

I want to know which loan is really the best. I want to borrow about $120 gran but after looking at all the charges that loan in 30yrs will cost me $350gran, that doesn't sound right to me.

Answer 1

Hey I used to be a loan officer for several years. This is a generic answer and may not fit your needs, however here goes. A home equity loan/line is a secondaray mortgage the Loan is a fixed rate product that borrows against the difference in the mortgage current and the appraisal on the property thus equalling equity. The line I wouldn't touch with a 100 foot pole it has a variable rate of interest and it has been fluctuating all over the place with all the recent changes in the market and prime rate all over. On the issue of refinancing something to consider is what was the rate on your home when you got the original mortgage? If is at or around 5 percent. LEAVE IT!!! You won't see a rate like that again for quite some time. Its not worth rolling that low rate into a new mortgage to get equity out of it and thus suffer an increase of possible up to 8% depending on your loan to value in the house. Meaning how much of your equity is left if you refinance. The less equity in your home means the higher of an interest rate you will receive. Lenders are tricky and will take you for a loop if you let them. If you need additional money for whatever you are trying to achieve and cannot come up with the cash. Listen the best way to go is a home equity Loan with a fixed rate and the minimal amount needed not a penny more. Most draws are grouped into the thousand dollar category. Meaning If you need 10,100.00 you will have to take a home equity line in the amount of 15,000.00 or that is what they tell you. If you complain enough you can get the loan for the amount you need only. Bankers will try to get you up to up your original draw from say 10k to 25k to get a discounted rate on interest. Don't do it. Also they try to get you to back your equity loan with a third open ended line of credit that they tell you that it dosent have to be drawn off of. There benefit they offer is that if will waive the annual maintanince fee if you get both. Do NOT DO THIS!! People often get themselves in bad financial situation they dont need to get into because of it. I have seen people say yea that would be a good thing to have in case of emergency and then they end up maxing out both the equity loan and the line of credit. Remember that all three of those products are tax dedicutable ,the mortgage interest. On the refiance your cost include mortgage appraisal, tax, recording fees, loan originator fees, however on home equity since it is only a secondary lien against an already preexisting mortgage offers the benefit of free apprisals and fees( with most banks) if you get 10k or more. Also no closing cost on a home equity loan/line and you do pay closing cost again with a refinance. The rate may be cheaper on a refinance than home equity but a true mortgage loan officer can recommend the correct solution if they are honest. Does the fees and closing cost equate to saving compared in relation to the home equity loan/line and possibly a short term higher interest rate. Good Luck!!

Answer 2

You have to have a loan, before you can refinance or get a home equity loan.

If you can afford the payment do a 15 year mortgage. If not do the 30-year mortgage and pay additional each month on the principal of the loan this will pay it off faster. As some companies allow you to make bi-weekly payments on the loan, this also pays the loan off faster because you actually make one extra payment a year by doing this.

Interest rate is the biggest factor in the mortgage biz. Get the lowest interest rate possible and when interest rates drop significantly (if they ever do again) then refinance.

Answer 3

Loan - A laon is an out-right borrowing with or without collateral.

Refinancing - Refinancing is borrowing and putting money into your business. that is investing more into the proposed business.

Home equity - Home equity line of credit allows you to borrow money using your home as collateral. In this case, your property is mortgaged.

POINTS TO NOTE

1. All the credits attract interest.

2. The interests vary

3. The variations is dependent on time and value of credit.

ADVICE

Be very careful on what you want to do with the money.

Answer 4

They are all different types of loans, usually for different purposes. Usually people who are doing home improvements will take out a home equity or just refinance. It depends on the mortgage company you are working with.They all offer different programs.

350k actually sounds really low as an end pay-in at the end of 30 years. That figure should be much higher. Interest really gets you. A nessecary evil, I'm afraid.

Does that answer your question?

Answer 5

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