Home Equity, refinance?

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I bought my house 2 years ago when the housing market was still high in NY. I bought my house for $ 430,000 & put down a little over $ 20K. Over the last 2 years things unfortunately happened and we started to incur debt of about $ 30K. I know that’s a lot. We are able to make payments, but it’s getting hard with the price of gas & everything else. I was wondering would I be able to refinance to put all my debt into my mortgage payment? Or am I better taking a home equity? Does my house have equity after 2 years & now that the market is down? My interest rate on one loan is 6.50% & the other loan is 9%. I need suggestions please.

  1. Reply
    May 3, 2011 at 7:46 am

    MY suggestion is to pay down the high
    debts as fast as possible; and get a temporary 2nd job to do so. YOU can
    get a new 2nd or equity loan but that will
    just cut the interest rate that you are already
    paying. Might as well not give a mortgage
    broker or lender more of your hard earned
    cash; just make payments and extra payments to whomever you owe and
    in 6 mo, the debt will be 1/2 gone!

    [unless the interest rate is 25% or higher
    then borrow to pay it off.]

  2. Reply
    Jeromy W
    May 3, 2011 at 7:47 am

    The good thing about most of NY is that they have held their values pretty well for the broker’s and bank people I know. The issue your running into is the loan amount. Depending on the value of your home, you may have to go jumbo and that will be costly, expecially in ny. The only way a home equity would work is if you got one that offers the segment or lock in feature (M&T and HSBC) offer such a product up there. for example, you got a 50k heloc and took out 25k, you could call the lender and lock the rate on the 25k draw. The downside to his is that will not help your credit at all because they report what you can take out, not what you owe. The only way I see out of this is a CEMA, which is specific to NY. this will save you big money on your mortgage tax as you’ll only pay on the new money amount. Also see if you can find the hud-1 from your purchase as you’ll be entitled to a discount on title insurance. I would get the home appraised before you do anything, as you’d need the appraisal to come in at least 550k to be able to do anything, good luck

  3. Reply
    May 3, 2011 at 8:07 am

    It is more than likely that you no longer have any equity in your house, that it would sell for less than what you owe on it alone. I would expect it has lost about 50,000 in value.

    So, do not expect anyone to offer an equity loan or refinance with an increase in mortgage. No lender will be eager to buy into this situation.

    You might offer your creditors an opportunity to have you stop paying interest, and continue making your payments as principal only for some period of time.

    I expect that your payments now are all interest or very close to it, so this is almost a straight gift

    The objective from your creditor’s perspective is to get their principal back. They know you could go bankrupt leaving them collectively 80,000 in the hole. Knowing that, you know that the limit of any largess they may make will be something less than 80,000.

    Your unsecured creditor would stand to lose a full 30k, so keeping you paying principal is a major gain for them.

    Not so much the mortgage lender. They can foreclose if you stop paying, and sell out to get all but 50,000. They go back to drawing interest on all but the 50,000. So your leverage with them is really just the interest on 50,000. So expect them to negotiate for you to continue to pay interest of perhaps 4.5% on your mortgage even if your unsecured creditor has to accept zero interest just to keep you paying.

  4. Reply
    May 3, 2011 at 8:22 am

    Christine, it’s possible your home has gain some equity, but it’s not likely in today’s world. Also if you ever listen to Suze Orman and heard her say “don’t use your homes equity as if it is your personal bank”. With prices still declining in some areas, you could easily find yourselves upside down in the loan and be worse off. Of course you will do what you will but, don’t listen to some yahoo’s on here that will tell you they can get it done for you. It’s your call, I’d think this one through before making a decision.

  5. Reply
    Jennifer H
    May 3, 2011 at 9:02 am

    well you are an ideal candidate for a loan modification, it will at least get you out of that 9% rate. i can help

  6. Reply
    May 3, 2011 at 9:57 am

    I used “Credit Solution” to settle my debt and improve my credit score.They managed to reduce my debt up to 58%.It’s legitimate. Icame across this company on NBC News Special Edition.Check it out here:

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