Instead of moving into a cheaper home, I thought about refinancing for interest only. We have lived in the home for 2 years, but have over 65K worth of equity already.
2007-02-06 09:25:15 · 8 answers · asked by mandikins 1 in Business & Finance ➔ Renting & Real Estate
Why not, If you are strapped for cash now, but do intend to have more cash flow in a few years. It makes even more sense if you can lower your current interest rate. Try to get a loan that is fixed, and allows interest only for at least 5 years. The trouble comes if you can not make those payments comfortably. If that is the case it may be wiser to sell your house, and use the profits to purchase another that is in your price range.
2007-02-06 09:50:01 · answer #1 · answered by Ron B 3 · 0⤊ 0⤋
Tuff Decision:
Scenario 1- Sell the Home
After the costs of Selling the home you may end up with very little equity left to put down on a new home. Good is that you will get a good rate if your FICO score is still good.
Scenario 2 - Refinance
Refinance to rate/term. Rates have not changed since August 2006. So refinancing might be a problem. You will lose some equity due to refinancing. You can possibly buy down your rate with your equity giving you a lower payment. If you decide to go interest only than go with a 30 year interest only loan. Fixed Rate for the Term of the note. Usually no prepay. Years 1-10 two options: Interest only payment or full principal and interest payment. Years 11-30 you have to pay the full principal and interest payments. 10/1 arms are the same as the 30 year so you might as well save your money. If you go with a smaller arm than you are gambling with the market.
I hope these two Scenarios help you choose. If you should need anymore advice you can contact me.
2007-02-06 10:53:35 · answer #2 · answered by Openthathouse.com 4 · 0⤊ 0⤋
Move to a cheaper home, a refi is a short solution to a long term problem. If you can afford the house now, how do you plan on affording it after you take another 65k out?
You will soon find yourself back in the same position, with no equity this time. sell, and put the 65k down on a new lower priced home so you are not living house poor like you are now. This is why your short on cash.
Good Luck,
RE Agent
Remax
2007-02-06 10:38:59 · answer #3 · answered by frankie b 5 · 1⤊ 0⤋
If I did refinance for an interest only loan, I would not take out all of my equity. Try to leave around 30k in equity in the house, in case the market declines further, you won't be underwater. Also, when you do decide to sell the house, it would be nice to not have to bring cash to the closing table.
2007-02-06 13:32:50 · answer #4 · answered by dwanzor 2 · 0⤊ 0⤋
Hey
I can help. Honestly your situation requires much evaluation and there is no quick fix.
My name is Humphrey Mitchell. I am a mortgage banker here in New York and I wanted to know if you have already been qualified for a type of mortgage program? We have programs for 100% financing with a credit scores as low as 580. We have been in the industry for over 15 years. I can help you get the best rate and the right program. If you already have a banker great too...I welcome the opportunity to beat his rates and programs. Hope to speak with you shortly you can reply to this message or give me a call directly at (917) 337 8670. Hope all is well and Good Luck!
Cheers,
Humphrey
------------------
Humphrey Mitchell
Co-Chairman/CEO
Turbo Financial Inc.
303 5th Avenue Suite 1809
New York, N.Y. 10016
Cell: (917) 337- 8670
Phone: (646) 492-0922
Fax: (212) 213 - 1257
Licenses mortgage bankers in NY, NJ, CT, CO, MD, IN and FL. We are direct lenders.
2007-02-06 14:13:01 · answer #5 · answered by REALTY EXPERT 1 · 0⤊ 0⤋
No. If you're already in debt you might not be responsible enough to pay down the principle on the loan, and get further in debt. Live w/in your means, and you'll sleep better at night. Buy a less expensive house, take your equity, pay your bills, and start over out of debt.
2007-02-06 09:32:20 · answer #6 · answered by no pepper 3 · 0⤊ 0⤋
Sounds like a tough decision but times are tough and it may be what is called for. You may want to consolidate other bills like cars and credit cards to improve your cash flow then work harder in the future to live within your means. It doesn't have to be a negative solution if you follow through. Check out the free evaluation form at
www.totaldebtsolutionsllc.com
There are several loan officers in our network that can say yes to you but you may have an option to save additional money on debts via settlement as well. Good luck!
2007-02-07 05:59:18 · answer #7 · answered by CALIFORNIA GOLD 3 · 0⤊ 0⤋
You have left a number of questions unanswered: have you shopped around to see if an interest-only loan will make enough of a difference in your payment? If you take a mortgage interest deduction on your income taxes have you considered that you will no longer be eligible for that deduction? When the interest-only period of your loan ends, will you be prepared for the new larger payment? Do you have a mortgage broker that you trust not to steer you into a loan that's a better deal for him/her than it is for you? You really need to do your homework before you decide. Good luck!
2007-02-06 10:56:52 · answer #8 · answered by Anonymous · 0⤊ 0⤋