Posted by Scott Hadfield on January 25, 2006 at 23:56:51:
That is correct regarding the approval for a second mortgage, but here is the kicker it is more profitable to refinance for a broker than it is to do a home equity. That is a deeper issue if that is the case. The best way to understand where the home loan truly lays is by establishing the blended rate between the two loans. Than you will fully understand that you are in a pretty good position. Although if you did restructure the loan I would find it hard to believe that you couldn’t stay in the low 6’s. I am curious how you would deal with the increased payment problem by carrying the second and the first verse just wrapping the deal into one loan if the equity use is for property acquisition. The mind set to begin to truly understand the investment market is cash flow and not rate dependency’s. Depending on the seasoning of the property you could work this to benefit you with purchase power and a lower monthly payment. Questions remain; how long will you hold the property, and how much equity do you need to purchase another rental. I have a couple of thoughts drop me an email and we can discuss further…
Posted by Lorelai on January 25, 2006 at 23:10:01:
A year ago we bought a SF home whose value has appreciated and we now have about $92,000 equity. When we purchased, we put 10% down with a 1st and an equity line of credit. The first is an ARM at 5 3/4% for 4 more years. The equity is a small line - $14,500 but the interest rate is climbing. 10.5% at the moment - now that is not alot on $14,500, however, my thoughts are that we could re-finance the equity line into a 2nd mortgage and take some cash out to purchase another rental. It seems to me that I could get a lower rate than 10.5% and I would have the 30-year amortization which I don’t have on the equity line.
My lender wants me to roll both into one - saying that its alot easier to qualify than for a second alone. I’d like to keep the 1st mortgage where it is right now - a good rate, and alot lower than rates are right now. Is it true it’s harder to qualify for a second? Our score is 650, but should improve due to the fact that one of the creditors is removing the report from the credit bureau. What do you think we should do? Any advice would be appreciated.
Posted by Smart Money on February 01, 2006 at 23:13:04:
Refinance everything into a 30 year fixed mortgage. Yes, your ARM is good now, but where will rates and property values be in 4 years? If you’re a buy and hold person, IMHO, your loans should match your time horizon for ownership.