Home Equity Loans – second mortgage

eHow asked:

Getting a home equity loan on a house that will be rented out involves having at least 20 percent equity in the home, examining a credit report and applying for the loan through various brokers. Get a home equity loan with advice from an experienced property manager and landlord in this free video on rental property. Expert: Damon Thompson Bio: Damon Thompson owns three rental properties in Detroit, Mich. and has owned up to seven rental properties at once for more than 15 years. Filmmaker: Lynell Doyle

Sarah

rsc asked:


I have about $60,000 in my cash accounts (banking and savings). Some of this money is in a savings account that I would consider my emergency funds. I have a very generous retirement program of about 12% of my salary, which has been established for about the last 6 years. I am 33 years old, with a wife that has a job and a generous retirement plan and 1 baby.

I have some other small mutual funds that I started from savings which are 3-10 years old and have a current value of approximately 12,000 dollars.

I have a mortgage. We purchased it for $579,000, and we put down 10%. The first loan was a 7 year arm at a rate of 6.5%, and the second loan was a home equity line of credit for $ 57,900. The second loan is a variable rate, pegged to the prime rate. When I first started that loan, it was at 8.5 %, but it is now as low as 4.2 percent. This, of course, changes with the prime rate. The first loan I pay on principle, and the current debt service is $ 448,000. The second loan is interest only, and still has a principle balance of $57,900. The down turn in the housing market has left me with only about 2-4% equity in my home as the latest appraisal was only $520,000

My only other debt is a car loan which has a balance of 15,000 and a rate of 5.25%.

What should I do with this extra cash?

Do I:
1. Pay down that line of credit? (obviously this has a variable rate that can change, and is currently taking up 100% of my line of credit which impacts my credit score)
2. Buy a second property? There are some good deals out there for a second home (i.e. condo in Florida) or a rental property. This would be an investment property since we can get something very cheap, but the downside is managing the property.
3. Put it in an invest vehicle? A mutual fund, bonds, etc.
4. Leave it in my savings account?
5. Or something else?

How much of that cash should I keep in my account versus investing or paying of my debt?

SHELDON

Brian G asked:


My wage is approximately 55% than my wife’s
This will be our 2nd home
With our first home, I am the only one on our 1st loan; we co-signed for the second loan (which represents our equity line and)
We both have comparable credit scores
Also, should mention that one of our homes is an investment home/rental property
And with this question, wondering what the pro’s and con’s of each scenario would be. (Me on the loan alone, or both of us on the loan)
Thank you

TOMAS

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

723 asked:


We are wanting to apply for a mortgage to purchase what will be our 2nd investment property. We currently own our home & have 1 rental property. However, we do not have the cash available for the required 10% down payment for an investment loan. Since the property is very nearby, my husband and I would be able to categorize it as a second home purchase for personal use. Our question is: If applied for as an investment property, are there 0 % down – type investment loans we could look at? (we are not wanting to use equity on the other properties…one has been used to that extent already for home improvements). If applied for as a 2nd home, what are the requirements for that type of loan?

COLBY

menotyou asked:


We’ve found a great deal on a little house. It’s small but would suit our needs for the next few years. But 3-5 years down the road, I could see us upgrading to a larger home. In a perfect world, we’d use the first home’s equity toward our second (larger) home and still retain the first (smaller) home as a rental property, but I don’t know enough about real estate and mortgage lending to know if this is a feasible plan. Any advice? The first (smaller) home is selling for way under assessed value, so I’m tempted to scoop up this deal, but I don’t want us to be “stuck” in a house that’s too small down the road.
Thanks goz1111 for your helpful and relevant answer! The home in question is a REO home, if that makes any difference.
I have no patience for loser spammers who don’t even read the damn question! Get a life!! I remember when you used to be able to get real answers from real people here. What happened?

ONLY REAL ANSWERS PLEASE!

I REPORT SPAMMERS!

Thank you

FELIX

Mariza V asked:


I owe 2 houses one under my name, in the rental property I am 1 payment behind in the first deed and 5 payments behind on the second deed. I can’t make the payments no more, I am in home loans, and my paycheck has been reduce soo much. I want to keep only my owner occupied property and let go the rental. Balance is $410,K and $220K on second. I been thinking on calling the lenders to give them the house back, some other friends tell me to do a shortsale, and other to file bankruptcy or forclose the property. at this point all I want is not to have $5,500 mortgage payment a month. I can’t refinance because there is no equity, and my credit has been ruined due to the late payments, I don’t want to go to a credit consultant because my intentions are not to keep the house. I need some advise before I go to an attorney .

SHAWN

Celeste C asked:


If your property has appreciated in value and you elect to take out a new mortgage, thereby getting cash out, is the cash depreciable on income tax returns, even if spent on a vacation? I’ve been told that you can do this and know two people who have done it and say it’s legal. For instance, you take out a new mortgage for $80,000.00, the mortgage company pays off the old mortgage of $60,000 and you get the $20,000. as cash. You don’t have to show receipts because you simply have a mortgage which I think can be used as cost basis for depreciation. Is this true?

CRAIG