Home Equity Loans – second mortgage

beach_babe972 asked:


does this sound good?

you can buy a house now, and have it payed in 5-6 years. you can buy your vacation house now, or retirement house, and rent it, and the rent will pay the mortgage. and it will apprechiate by the time you retire.

you can reverse the compounding interest on a 30 year loan. (average daily balance). just like banks will take your payments and pay the lower interest loans first. when you do a 30 year mortgage, the lender takes monthly payments after the interest coumpounds the most. so instead you can take out a HELOC (home equity line of credit) as a second mortgage, a credit line of 30,000 for example, and use it to pay $15,000 towards the principle. now you lowered the principle amount by 15,000. so the interest is less. then use your monthly income to pay down the HELOC. when the HELOC is back to 0, pay another 15,000 to the principle with the credit. and your paying down the principle a lot faster than if you just made monthly payments to the loan. and the first month on the HELOC after paying it back down to 0, is 0%. the balance has to go past 30 days to have finance charges. since your always paying it down every few months, you’ll always have 1 month with no interest.

if you only paid monthly payments, after the first 10-15 years on a 30 year loan, you barely paid anything to the principle becuase most of your monthly payments go to interest.
if you have a 500,000 loan for 30 years, your actually paying $1,000,000 after 30 years because of the interest on the average daily balance of the loan.

so with the HELOC, you lowering the principle amount way faster then you could just making monthly payments.

and since your renting your retirement house, theres still monthly payments to the loan from the renters.

then in 5-6 years you will have some apprechation, and most of the loan will be paid, and you can live in it almost free, or sell it and have $200,000-$300,000 tax free.

CHUCK

M. Mansour asked:


Hi,

I took a 80/15/5 loan to purchase my primary residence. Just received my first statement on the second mortgage and it shows a finance charge that is ADDED to the balance.

I arranged this mortgage through a mortgage broker, she never mentioned anything about these finance charges.

Are these finance charges typical with 2nd mortgages? what is a reasonable value for such charges?

How do I get out of this finance charge?

Do I have anything on the mortgage broker for failure to disclose these charges? I saw the loan documentation only at closing!

Thanks,
Mohamed

SETH

Dave Badge asked:


Chicago home equity loans are the type of loans where the borrower uses the equity in his Chicago home as collateral. You can lose the home and be forced to move out if you don’t repay the debt. Such loans are often used by families in need of financing help to make major home repairs, pay medical bills or college tuitions. Chicago home equity loans create a lien against the borrower’s house. Equity is the difference between how much the home is worth and how much you owe on the mortgage (or mortgages, if you have more than one on the property). Such loans require an excellent credit score and reasonable loan-to-value ratios. An individual can apply for an equity loan, no matter the type of home he has. It can be a condo, house, apartment, or townhouse.

The maximum amount that you can borrow through a home equity loan depends on your credit score, monthly income, and the appraised value of the collateral, among others. It is possible to borrow up to 100% of the appraised value of the home. Chicago home equity loans can be of two types, closed- and open-end. Closed-end home equity loans generally have fixed rates and can be amortized for periods usually up to 15 years. The open-end loans, also known as HELOC (home equity line of credit) loans, are at a variable interest rate, but here the borrower chooses when and how often to borrow against the equity of the property, with the lender setting an initial limit to the credit line.

But when comparing the two, keep in mind that you cannot simply compare the Annual Percentage Rate (APR) for a loan with the APR for a home equity loan because the APRs are figured differently. The APR for a regular loan takes into account the interest rate charged plus points and other finance charges. The APR for a home equity line is based on the periodic interest rate alone. It does not include points or other charges.

Here are the steps you should follow when considering a home equity loan in Chicago:

1) Check your options – home equity loans are not the only method of financing. Remember, if you decide to get a home equity loan and can’t make the payments, the lender may foreclose and you would lose your home.

2) Do the research – if you are keen on getting such a loan, then talk with several lenders, including at least one bank or credit union in your community. Compare their offers. Comparing loan plans can help you get a better deal. Beware of loan terms and conditions that may mean higher costs for you. Keep in mind the following parameters:

-Can you afford the interest rate and monthly payments?

-The period of the loan, or how long you have to pay it back

-Check the penalties for late or missed payments

3) Double check – think twice before signing the contract. Have an attorney review the loan papers and make sure the terms are the same ones you agreed on.



HANS