I refiance last dec for a 2year fix, which i will be refinace in 2007 for 30fix, but i want to get equity loa

Question

apply for an equity loan for 20.000 at this time, will that hurt me when i refinace in 2007.

Answer 1

the rates in '07 will most likely be higher than they are now. as of now you're looking at about 6.5%. this is if you have very good credit, usually above 600 or so,middle score. when you do the refinance, if able to, you would want to do a cash out refi. no sense in refinancing, then taking an additional HELOC afterwards later on down the road. do it all at once to save yourself some money in fees. this will ONLY work however, if your house possesses the equity within it. generally your loan officer and appraiser will work in conjunction with you on this to get the good amount. however sometimes appraises can be lenient or stingy depending on what kind of area you live in. do this, add up your current mortgage balancem plus your 20k cash out, then add about 3% of that total amount and you have a good idea of where you need your appraisal to be. the 3% will generally cover the fees and all that stuff which will be taken out of the equity in your home, unless you want to pay for it out of pocket. however your credit looks, will also tell you about how many points you will be charged to do all of this. 2-3 is normal. if you are A paper, or one possessing near perfect credit, chances are you won't be charged anything and depending on your lender, sometimes they will even eat the closing costs for you. if your credit is less than average, expect to be charged points. not primarily to screw you over cause if you go anywhere else to apply for the loan, you'll be looking at the same scenario. it all boils down to your credit score. that's your biggest factor in all this. then it's your appraisal. after that, it'll be a breeze.

Answer 2

any 2nd mortgage taken out within 12 months of your refinance will be considered a "cash out" loan, even if you don't get any more cash out during the 2007 refinance. If you are a A+ customer, some banks charge more for what is considered a "cash out" refinance and/or they will limit how much equity you can use for the refi. Get your home equity loan before Dec. 2006 so you will have at least 12 month seasoning when you refi in Dec. 2007.

Answer 3

Assuming you HAVE the equity, not really-- especially if your score is good. Are you talking a second mortgage or a cash out first mortgage? If its a second, you would just want your '07 mortgage to cover both loans.

But I dont understand why you dont just refinance NOW, before the rates just keep rising, to the 30 year fixed and get the equity out. Loans generally have fees and closing costs and you're just costsing yourslf more money to keep playing the re-fi game.

Answer 4

Yes, on two counts.

1. Because your debt is higher after the $20k equity loan. Assuming your income stays the same.
2. Each time you apply for a loan, your credit score get lower.

Answer 5

as long as you are not late on either one you should be fine

The rate on the equity loan will be higher and there may be a prepay also.

But also remember that the rate is decided by loan to value and credit score. So the higher the LTV the higher the rate usually.

Answer 6

You can get a better interest rate doing a refinance with cash back than by taking out a separate loan.

Answer 7

Anytime you borrow $$, the risk of not paying increase. So if you cannot pay back all yr loans, refinance will not occur!! Why refinance only for 2 yrs fixed!! You spent a lot of $$$ in refinancing fees!!!

Answer 8

Yes, you need to redo your first into a 30 year fixed and get cash out. Then you are done and you should end up with a good rate.

Matt
http://www.diversifiedlender.com/
http://www.minnesota-mortgage-rates.net/