Home Equity Loans – second mortgage

Milos Pesic asked:




Homeowners need to be careful when taking out a home equity loan. It is a good idea to know the value of your home’s equity before taking out such a loan or you might wind up paying back more than your home is worth. Equity is the amount your home is currently worth after subtracting the amount still owed and taking into account the increase or decrease based on current market value. For example, if you purchased your home several years ago for a price of $200,000, then your home should be worth much more than that today due to the rise in market value.

Some homeowners want to take out home equity loans in order to carry out home improvement projects because they believe that modernizing their home will increase its value. It is important to know however, that market equity rates are already factored into the current value of your home. Home improvements are usually a good thing, but if it is not really needed, it could cause you to go deeper in debt. You could take out a personal loan instead of a home equity loan so your home equity is not affected, but you still have to pay back the loan with interest, so it could have a detrimental effect on your personal finances to do the home improvement if you are not certain it will actually raise the market value of your home.

If you do decide to take out a home equity loan for a home improvement project, just realize that it is just like taking out a new mortgage. You must pay closing costs, fees, capital and interest on the loan. This is true for any home equity loan that you take out regardless of the reason. That is why it is very important to think things through and make sure an equity loan against your home is the wisest choice for your situation.

Consider also what might happen if you are unable to repay your loan because of illness or if you lose your job. In that case, if you have taken out a home equity loan, you risk losing your home. Laws vary by state so you should understand the laws where you live. It might be safer for you to protect your home and take out a different type of loan if you have a choice. A home equity loan could be the answer to your financial woes or it could be a financial disaster for you. That is why it is very important to carefully think things through before you act. Seek advice from a financial counselor if you need help making a responsible decision.

Harold

lb1 asked:


here is my situation, I have two rental homes. One that has o equity. One home literally has negative equity with a 30,000 mortgage and the other has approx. 25000 value with a 60,000 mortgage.

The first home is un rentable and the second home has been vacant for 1 year. (have not been able to find tenants)

Until now I have been able to pay the mortgages to avoid damaging my credit. I just lost my job and am not sure what I should do as I wont be able to pay the mortgages much longer.

I want to keep my own home.

What do I do, just let the rental homes forclose? file bankruptcy?
What is the best option as I am not sure what to do?

JARVIS

Chris asked:


Due to the down economy I was laid off from my job. This is happening everywhere but I was wondering if I could still get a second mortgage as a type of “rental income”. I currently own a home, well still have a mortgage. But are lenders still willing to give out loans to people who are unemployed but yet looking to make a second source of income from rent. Or could I pull out a line of equity on my current home? Please give me some advice

(reason I ask: Found a steal on a home appraised at $99,000- selling for $30,000)

ORLANDO

puppiesnmarshmellows asked:


This is going to be embarrasing, but i don’t know if we are doing ok or not. I don’t know what the norm is for money leftover after bills but according to a debt/income ratio i did today we are at 34% which is good, i guess.

My husband makes 1333 twice a month (that is what we see after taxes) there is a addtional 125 going straight to our savings account each month on top of the 1333 twice a month.

Our bills are as follows

first check
car-291
insurance-62
elecric,gas,water 200
credit card 170
cable-93
which leaves 517 left for gas and groceries

second check
mortgage 600
home equity 103
home phone and internet 100
cell phone150
which is a little tighter at 380 for gas and groceries

total for the month we have 917 left in our checking, including the 125 that is in our savings its 1042 a month.
I just am curious how we are doing financially? I’m scared to death about this kind of thing and fear we are doing something wrong. We are military so no health ins.
well we’re military so no job loss..and no unexpected medical bills. we really don’t have to worry about that because its a secure job.
no credit card is what we decide to pay on it..that isn’t the minimum payment. We have a home phone and a cell phone because up until a month ago we only had a home phone. Effective the 26th we will no longer have that home phone. The second mortgage was to redo our home, its almost paid off now, it was only 10,000.
oh and why don’t i work? I have two small children and noone to care for them. We don’t live near our families. There is NOTHING wrong with being a SAHM parent.

ARNOLD

realchineseprincess asked:


Will be ex-, took home equity line of credit under his name but again the house we bought together(still has little mortgage) without me knowing and signing(i have just read the document, no my name, no signature, no fault signature, too). He lost the $ and lost job. what should I do? Can I sue the second lender? How can I protect my kids and I from the lender take the house or after my assets?

DIRK

SBCT asked:


I purchased a home with a childhood friend. Both our names are on the title and both of our names are on the mortgage. We lived in the home together for approx. 1 year and then we moved out going our seperate ways and turned the house into a rental property.

I purchased a second home with my new wife that we currently live in. My childhood friend lost his job a while back and can not afford to pay his part of the mortgage for the house and i can not afford to pay the whole mortgage in addition to the mortgage on the house me and my wife live in. the rental income from the house helps a little but we still have an approx. $1000 difference every month we have to come up with (his half is $500 and my half is $500). what are my options? if we cant pay the rental houses mortgage anymore and it gets foreclosed upon, is my home i live in with my wife in any kind of jeopardy???

selling it is out of the question as the real estate market slide puts us in a negative equity situation.
California……..

How long does it take for my credit to recover from that? 5 year? 10 years?

WILSON

Aimee asked:


My fiance and I purchased a house 2 years ago, but we recently decided to pursue doctoral degrees in a different state. We need to move to the other state by mid May, and given the current state of our economy, we are concerned that our house will not sell in time. A good friend of ours is willing to rent our house if we can’t sell it, and the rental income will more than cover the monthly mortgage payment as well as taxes and insurance. I understand that mortgage lenders are getting stricter about who they lend money to. Do you think there’s any way that a financial institution will grant us a second mortgage so that we can buy a second house? We have roughly $25,000 equity in our current house, and the balance of the mortgage is only about $90,000. We also have just over $50,000 in savings (not including retirement), so we’ll easily be able to put 20% down. The kicker, though, is that I’ll be giving up my job for a graduate assistantship, so our total household income (not including potential rental income) will likely drop to about $40,000. My fiance is a master’s student right now, so his income will not change considerably. If we cannot sell our current home and we’re forced to rent to our friend, then will mortgage lenders include this rental income in our total household income when deciding whether or not we qualify for a second mortgage?

TYLER

Kenetik30 asked:


my girlfriend has a condo in los angeles which is worth 300K. She tried to start a business and quit her job 2 years ago. well suffice to say the business is and was not going too well so she went out and got a home equity loan of 50K. She squandered that money and got 25K line of credit. Mind you she doesn’t have any income (REAL JOB) coming in except some money coming from her business and her credit lines.
I just found out she has an ARM mortgage on her condo which she was paying interest only and now it’s about to go up to 2500 dollars a month. She finally got off of her but and got a real job paying pretty well for L.A. and She decides to rent out the place and move in with a friend to help pay for mortgage, line of credit, and equity loan because she is upside down on the property. Now that she has a tenant in her condo, she is now trying to buy a foreclosed house with her friend. Is this possible with all the mortgage dept she has? She has only been working for 2 1/2 months.
side note:
she has a credit score of 801.

she pays all of her bills on time and in full.

she was late a couple of times on her line of credit loan.

Is this legal? Can this be done?

LEOPOLDO

thebuffettour asked:


When we went to refinance in order to take out more money (job loss) we told the mortgage company (biggest one in MI) that we had two mortgages. One was our main and the second was a Home Equity Line of Credit (that this same mortgage company brokered).
The concern was since home values had dropped if there would be any equity left in the home. The banker then came back and said that whenever the Line of Credit was sold from the original company to the second company it became a standard LOC, so we were able to refinance and get money.
The thing is we get interest paid forms for taxes so did the mortgage company make a mistake? How do we find out if the LOC is a Home Equity and if this company actually has a right to money if the house is sold?

JAMIE

urban_rednek asked:


I am getting ready to re-fi my home and want to know how i need to classify it for my mortgage app. It’s the only property i own, but last year i had to take a job out of state (economic reasons) so i am currently renting it. Can i still consider it my primary residence or would it be considered an investment property or a second home?

How much more are interest rates for an investment property given plenty of equity, great FICO and steady income?

MICHAEL