Mortgage refinancing or mortgage?

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I need to make some repairs to the house and occasionally my mortgage for the same amount (6%) 30YR to refinance or follow the path with Home Equity Loan 7.85% for 15 years. Does anyone know if an option is better than others in the long term?

5 Comments
  1. Reply
    Kain
    February 9, 2011 at 5:06 pm

    find a new mortgage company and do a refinance. rates are not 6% right now. they are 5.625% anything higher is a rip off.

    home equity lines of credit are not fixed rates and rates are the lowest they have been in over a year. makes no sense to get on an adjustable rate when all rates are going to do is go up from here…

    good luck.

  2. Reply
    Dale H
    February 9, 2011 at 5:34 pm

    If you could get 6% on a cash out refinance without PMI and minimal costs, the new first mortgage would give you a lower average cost of funds and monthly payments.

    On the other hand, if you have to pay a couple thousand in closing costs on a new first, the low closing cost on the 2nd might be better. It may really come down to how much additional borrowing you would be doing at the higher rate vs. what the difference in closing costs is.

    To do a proper analysis, I would need more information. I would suggest calling a couple banks and having them put together some good faith estimates. The analysis is not difficult so any competent loan officer should be able to help you with it. Watch out for pressure to refinance the first. If you are only borrowing a few thousand on the 2nd (home equity), you are probably going to be better off going that route, the the LO may try to steer you into a new first as they can’t make any money on a little loan.

    Good luck.

  3. Reply
    MM C
    February 9, 2011 at 5:54 pm

    You have to look at the whole picture. If you have your mortgage loan for long time and had paid most of the interest, refinancing means you start over again to pay those interest plus closing cost. How much are you gonna need for your home repair? If it’s a small amount like $ 5k to $ 30k, you may want to lend from your HELOC instead because it’s a interest only and very flexible with payment. You can pay extra each month to bring it down in few years. Its interest rate usually lower than a 30 years loan. Bank of America is about 4.5% and no closing cost at all. Check it yourself and do the calculation. Most of the HELOC interest you paid is tax deductible. Usually after 15 years it will turn to a fixed rate or you can refinance to a fixed rate any time you want.

  4. Reply
    Eternal Optimist
    February 9, 2011 at 6:42 pm

    For the short run, get an home equity line of credit. These can be gotten at rates of prime to prime-1% now at 5. Todays news indicates the rates may go down, not up. Then when rates do start up, you can switch then to a long term fixed program. Often if you stay within the same bank there will be little to no closing costs.

  5. Reply
    Laurence S
    February 9, 2011 at 6:48 pm

    I think mortgage refinancing with cash-out could be the best option. As you can get a extra cash with paying your original loan and also you can getter better rates through refinancing. While in home equity loan even if the years are less you would have to pay for two loans.

    Here is the source of a mortgage refinancing company named http://iloanshop.com/apply_mortgage.php for your reference

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