Need advice about home equity loan. Help!!!
 

I bought a home about 10 years ago for $63,000. I have about $24,000
in equity in the house. I would like to get a home equity loan for
about $15,000 so that I can get some badly needed home improvements. I
plan on moving in the next couple of years (probably sooner). I was
planning to use my equity in the home to pay off the loan if I have
to. Do banks require that you pay off a home equity loan before you
sell a house? What should I look out for? I shouldn't have any problem
using the money I get from the sale of the house to pay off the loan,
should I? I was thinking about getting a home equity line of credit.
Do I have to worry about getting a variable rate since the rates are
low? Do I need a lawyer for a $15,000 loan? I don't want to refinance
because I don't plan on living in my house long enough to make the
closing cost worth it. I desperately need work done on my roof and
porch though. Any advice will be appreciated.

Thank You,

Andrew,

Great advice. I was wondering if it is possible to get a home equity
loan, then in a couple of months refinance both loans as interest only?
For example, my principle is 370K I plan on getting a 30K equity loan.
Then in a couple of months I want to refinance both loans into a 425K
(appraised value) interest only loan. Let me know

wrote...

I was wondering if it is possible to get a home equity
loan, then in a couple of months refinance both loans as interest only?
For example, my principle is 370K I plan on getting a 30K equity loan.
Then in a couple of months I want to refinance both loans into a 425K
(appraised value) interest only loan.

WHY?!?

You will likely pay fees for the HE loan, then pay fees again for the refi. In
the end you will have debt of $425K instead of $370K, cash on hand of $55K less
all those fees, and the prospect of a huge balloon payment somewhere in the
future.

In addition, you will pay the interest on the money for the HE loan while you
have it, plus you will have to pay it off for the big refi. That will increase
the stated APR by a significant amount.

What will all this refinancing get you?!?

In article . com,
wrote:

Great advice. I was wondering if it is possible to get a home equity
loan, then in a couple of months refinance both loans as interest only?
For example, my principle is 370K I plan on getting a 30K equity loan.
Then in a couple of months I want to refinance both loans into a 425K
(appraised value) interest only loan. Let me know

Yes, that is possible if you credit score and income will
support that kind of spending. But keep in mind that an
interest only loan is like committing financial suicide.
You end up never paying off any part of the loan, so you
never own anything. It is like renting except you take all
the risk and pay all the taxes. The only reason to do this
is to purchase far more house than you can afford, which
will either end up bankrupting you, or prevent you from
saving for retirement. That is OK if you don't mind fighting
with the alley cats for table scraps when you are 70 years
old.

-john-

--
================================================== ====================
John A. Weeks III 952-432-2708
Newave Communications http://www.johnweeks.com
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Thanks for the quick reply...Well two reasons first I may need money
fairly quickly for another RE transaction, secondly I want to make my
property more attractive for a protential rental. Mortgage is around
2560..need mortgage around 1800 to support rental rates in the area.

In article .com,
says...
Thanks for the quick reply...Well two reasons first I may need money
fairly quickly for another RE transaction, secondly I want to make my
property more attractive for a protential rental. Mortgage is around
2560..need mortgage around 1800 to support rental rates in the area.

Interest only seems to be gaining popularity for rental homes. Assuming
you meet your cash flow, you're simply never paying down the loan to
build equity. You'd still get any equity from appreciation, or of
course you could go way underwater if a price bubble in your market
bursts. Despite current claims, real estate can go down in price rather
dramatically, especially if prices have been driven up by speculative
excess, near-zero interest rates, and rapidly growing debt levels.
(Referring to Japan in the 1990s, though it does sound a bit like here
and now.)

--
is Joshua Putnam
http://www.phred.org/~josh/
Updated Bicycle Touring Books List:
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