Home equity loan/ Line of credit or Mortgage?

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I am in debt and need a large amount of money to pay off high interest revolving credit. My family members will allow me to “purchase” there home (which is paid off) and use the funds to pay off my debt. My question is: is better to “buy” the property with a mortgage or purchase the home for $ 1.00 and take out a home equity loan. I am also concerned about the tax consequences for each situation. Thanks alot.

4 Comments
  1. Reply
    internetmortgagepro
    May 17, 2011 at 12:50 am

    this is really simple. purchase the home for the $ 1 and either take out a mortgage on the property or a home equity line of credit (whichever has the cheapest monthly payments)

    because if you purchase the house with a regular mortgage you will owe that money to the bank and it will not get you any cash!

  2. Reply
    lenderjayne
    May 17, 2011 at 1:37 am

    It would be best for both of you involved to speak with a CPA to see if there will be any tax consequences before proceeding forward with anything. A few hundred dollars spent now for legal/professional advice could save you thousands later.

    As far as an equity line or loan. An equity line works like a credit card. It gives you a limit and as you use it you pay it back. The payment is usually interest only meaning nothing goes towards the principal. However, some equity lines will allow you to fix a certain portion of it depending on the amount you take out.

    However, typically, your traditional home loan that can be fixed as well has a lower interest rate then the line of credit. It is really best to sit down with a loan consultant to check out your options and what best fits your needs.

    I would be happy to discuss them with you. You can reach me at houseloan4u@yahoo.com to go into further detail.

  3. Reply
    citronge69
    May 17, 2011 at 2:16 am

    Do NOT get a HELOC (home equity line of credit) this is a rip-off to you and it will make it even harder to get out of debt. I worked for Countrywide and I know what they are promoting, and it all sounds good, but there is so much you are NOT told. Try to refinance or do a Cash Out option to pay off debit. Hope this helps. Try the site below for some insight.

  4. Reply
    stephen l
    May 17, 2011 at 3:12 am

    If the debt is delinquent, you might consider debt settlement as a way to keep the loan balance at a low , manageable level. Check out the source website; they also have loan officer contacts who could get you the best rates. Good luck.

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