My home is paid for and I have an equity loan.?

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I live in Ohio. Can I refinance this into a regular mortgage or some other kind of loan with lower interest rate? I am at a variable rate right now. Loan amt is 25000. And I still owe prob (without looking) at least 23000. Any financial wizards out there?

3 Comments
  1. Reply
    PelMel
    May 2, 2011 at 3:56 am

    If your credit is good and your house is worth more than the loan, it shouldn’t be a problem. Talk to the bank where you have the equity line to see if they will convert it. If not, you can take out a new loan from any bank and use it to pay off the equity line. It shouldn’t be difficult it all. Good luck!

    Update: Your equity line may have a penalty if you close it early, so find out and factor that into your decision. You can always pay the balance without closing it.

  2. Reply
    hfrankmann
    May 2, 2011 at 4:38 am

    You don’t need to be a financial wizard. Find out how much your home is currently worth – check sales of similar homes in your area. Subtract the amount of loans you already have on the house (your mortgage) from its value. That is the amount you have in equity in your house, the amount you can borrow. Of course you have to prove that you have the the ability to pay the bill every month, banks are being very conservative now because of the sub-prime mortgage scandal.
    I would consider refinancing the your mortgage to a fixed rate – you can add the amount you want to borrow, variable rates scare me just now with great inflation coming our way.

  3. Reply
    Quantum Leap
    May 2, 2011 at 4:46 am

    A mortgage loan and a home equity loan are the same, in that the house is used as collateral against the loan. That being the case, I would talk to the bank who originated the home equity loan and see if it could be reclassified and locked at a fixed rate. If that’s not possible, the entire loan would have to be rewritten as a first mortgage. The down side is you’d be required to pay any fee’s associated with originating a mortgage and, more than likely, an appraisal of your property, as some properties have actually lost value as of late. Additionally, you may incur a fee for early pay-off of the home equity loan, depending upon what it states in the paperwork you signed.

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