should i refi or take equity out? i own a home alone but my bro. pays 1/2 my apr is 5.3 fixed?

Question

i dont wanna take out money but he does cus of his high debt, what should i do? our payment is 1250.00 monthly and have owned the home for 3yrs, i bought it for 170 and its worth about 300 now please help me or us,

he owes 30k

Answer 1

Do not refi, rates are not that good anymore. If the home is yours alone, it's your decision. If you decide to, take out a Home Equity Line or 2nd mortgage if you believe that he'll pay it back, because unless you put him on the title and have him take it out in his name, you're responsible for the payments. You wouldn't want to be caught with that. Also, if you do take money out, have him give you the money so you know it's getting paid, if he doesn't pay it, they could foreclose on your house and all that equity would be gone.

Answer 2

You own 170,000 + 30,000 debit + closing cost say 10,000 (estimated high, ok) = 210,000 at 6.5 rate @ LTV (Loan to value at 70 percent). Your payment would be 1327.33 so your payment would be 77.33 more a month. That rate is at a conforming fixed rate. If your credit is 640 + you are conforming. This is the ball point for most lenders - I can uderwrite for 150 companies, and some will give you conforming a conforming rate with a lower score. You could also go FHA, and get a great rate with them too. Lots of factors to consider.

310,000 x 70 percent = 210,000 loan amt.

If your credit is sum-prime - your rate would be higher (by at least 1 pt) at a 7.50 to 8 percent. Just depends on your credit is 500 to 639 - ok.

Worse case 8 rate 70 ltv loan 210,000 payment would be 1540.90 month, Principle and Interest. That is not including taxes and insurance.

Talk with a broker, a broker underwrites for many company's (I underwrite for 150 companies) so I only have to pull credit 1 time, and they look at my credit. A single lender (not a broker) has programs available, but they may not be able to help you and your situation, so you go elsewhere, and than that person pulls your credit (see what I mean.) If you shop, your credit is pulled and that is considered a soft pull, for a 30 day period. Just like shopping for a auto, it is good for 30 days. If you apply for a credit card, that is considered a "hard" pull and it drags down your credit score. When looking for a home, please do not apply for a credit card, Department Charge Card, Gasoline Card or make any major purchases, like a auto, etc. This will pull your credit down.


Try to find someone (broker) that will pull your credit one time, and submit your loan application to company's that will go off his credit report. By the way, a loan application is called a 1003, and they will issue you a GFE (Good Faith estimate, with-in 3 days, that is per the RESPA laws, and the TIL (Truth in Lending). The GFE will tell you the up-front closing cost associated with your loan. The TIL will tell you the terms, rate associated with your loan. This is a estimate only - not the final - but it does help you figure things out.


Good Luck, and if I can help in any way check out my web site, for links to all the credit reporting agency's and other useful information. This is not an advertisement - just helpful information for you...

http://www.fanniemaefoundation.org/...

http://www.fha-home-loans.com/

http://www.freddiemac.com/

Answer 3

If you refinance, you will be paying one interest rate. If you take cash out (2nd mortgage) you will not only be making two payments but you'll be paying two interest rates. In my opinion you may want to ask the rates for both and get the full info on the closing costs. Remember to check the Hud 1 settlement to verify the costs they are charging you and if you sign and decide you do like it you have a three day right to resind.

It may cost you more in closing costs to refi, but your monthly payment will be less than if you're making two payments. If you refinance your loan payments will also be reamortized meaning they'll be calculated on a lower principal balance (that is if you have significantly paid it down from the original loan balance).

Make sure that the loan officer gives you an estimate and locks in your interest rate. When you sign your loan docs also make sure that you check the promisory note to view the rate (just to make sure it is the same as what they quoted you), the due date, and any prepayment penalty charges you may incur and the prepayment fees and terms. This way there are no surprises if you so desire to refi again in the future.

Answer 4

I take it your brother thinks he is part owner as opposed to just a renter. Personally, no matter how close you are to your brother if you loan money to a relative or a friend for that matter, don't every expect to get it back. Go into the loan as if you are giving it to him. If he pays you back then great. If he can't pay his $30K debt easily what makes you think you are going to get it back?

If you insist on shelling out the money, then your options are a cash out refinance which would give you the opportunity to choose a longer term and better rates than the equity line. A equity line of credit will be easier and less costly up front but it is basically a "credit card" secured with your house.

Big decision not to be taken lightly.

Answer 5

I would keep your current 5.3% fixed and take an equity loan or a line of credit. Refinancing may lower your total payments per month (or not), but you won't get 5.3% again, and you only had it 3 years. Determine if you will sell in the near future. You can get low interest guaranteed for the first few years, with higher interest later, or a balloon payment. Watch out for ARMs. They will be going up, and so will your payments until you sell. If you refinance, try to get 25, 30 or even 50 years mortgage, especially if you will probably sell sometime in the future.

Answer 6

If you refi, you'll not get a 30-yr fixed for as low as 5.3.

If your brother is making payments toward the $30K debt, go ahead and get an equity line and let him make those payments. At least this way, you will be able to deduct the interest payments from your federal income tax.

Answer 7

you have a lot of equity in your home and I have to assume you have good credit if your current loan is a 30 year fixed at 5.3% so your options are open. you could easily take out $30,000 in equity to help out your brother and get good terms on a loan doing so.


you own the home by yourself, is your living arraingement with your brother permanent? if not, you will have his debt on your loan for 30 years.


your payment will be higher because you will have a larger loan size and you will not get an interest rate in the 5% range under current rate conditions, but you could get around 6 without much trouble.

if you choose to help your brother out, you could use a home equity loan or a re-fi of your current loan.

i would like to speak with you about this furthur. I am a Mortgage Consultant who can steer you in the right direction. contact me at [e-mail]

Answer 8

I work for a mortgage company and even i wouldnt try to get you to refi...dont listen to any mortgage ppl that want you to refi cuz all they want is to make a buck...keep that 5.3 fix cuz thats impossible to beat unless you get into a pick n pay program which says your payin 1.5-4% but in reality its close to 7.2%...keep what you got and just get an equity line.

Answer 9

DONT REFI

You cant find better rate right know, you will lose money more than you need

Better try to take HELOC Home Equlty Line of Credit, you can take 30K or more for Prime+1 with no closing cost.

Answer 10

Pull some equity out or open a line of credit against the property. Hold on to that 5.3 morgage that you have.

Good Luck!