basics on home quity loan? - Tilted Forum Project Discussion Community

oscar0308 · 10-03-2006, 03:27 PM

with some bad decisions, some dumb mistakes, some downright ignoring the problem, my wife and i have found ourselves in debt... ALOT of debt. over the last 2 years we have amassed approximately 30K in credit card bills. i dont want to get into how (cause its embarassing and frustrating), but we need to change somethign really quick. we are getting further and further behind mostly because of the interest being acrued each month. i think our best solution would be to take out a home equity loan to pay off the CC bills. we have over 60K in equity so we shouldnt have any problem doing that, but i have very little knowledge in what to look out for, how to get one, where to get one and anything else anyone thinks i should know.

so anyone have any advice?

and i btw i did do a search, but didnt find anything about this on here, but my apologies if i missed something.

Lady Sage · 10-03-2006, 04:25 PM

Most banks will lend around 80% of the homes equity. So take what you would sell your house for divide by 80 and subtract what you owe. That is probably around what you will qualify for. Credit and debt to income plays a big part in the descision process. They also take into consideration how much the loan will lower it to.

Be sure you shop around. Get fee lists from the banks. Rates, application fees, PMI, points, closing costs, appraisal fees, pre-payment fees and yearly fees to start. Be an informed applicant, you dont want suprises.

Also, be honest. They are gonna pull your credit and see everything anyway, save them the work. If they call you saying they need more information do what you can to get it to them as soon as possible.

Hope this helps.

eribrav · 10-04-2006, 04:02 PM

I would make a chart of monthly expenses. Then compare that with monthly earnings. Slash expenses until you can cover them AND take a bite out of the debt each month. You might even have to work more than you do now. Maybe that sucks, but remember you're dying of self-inflicted financial wounds and you may have to take some unpleasent medicine.
That's the way to actually address your problem. Taking out a HEL/HELOC is a way of avoiding the underlying problem. It will also convert your unsecured debt into secured debt. Then if you don't change your ways you will lose your home. Not a good thing.

NoSoup · 10-04-2006, 09:47 PM

I'm a mortgage broker, so I can hopefully answer any questions you may have.

First of all, let me say that there are a ton of programs out there, and depending on your credit, you may actually be able to loan over 100% of your home - however, I would not recommend it. One of the easiest traps to fall into is thinking that what you're pulling out is "free" money - often times people will take out a bit - or sometimes a lot - of extra to go on vacation, buy new furniture, or other things that I wouldn't really recommend. I'd suggest you stick with taking out just enough to cover your credit card bills and any closing costs associated with the loan.

As far as things to look out for - for a second mortgage, your biggest concern is going to be fees - whether they are charged up front, worked into the loan, or a prepayment penalty. Also, watch the interest rate you are being offered. If the fees seem unreasonable or the interest rate seems incredibly high and you think that your credit wouldn't warrent such a high rate, go somewhere else, or at the very least shop around.

For a second mortgage, I don't think I would recommend going to a broker, but it really depends on your situation. You may want to just check with one to see if it would be more beneficial for you to refinance your first mortgage and just add the balance to that - but be wary, it would likely only be beneficial if you are getting the same or lower interest rate, otherwise I'd just go with the second mortgage.

Either way, shop around and get the best deal you can - and work the numbers. One company may offer less in closing costs, but the rate may be much higher than another company, see which would save you more money over the long term. Unless you are able to pay it off extremely quickly, it will likely be more beneficial for you to go with the lower rate.

Finally, once you do get all your paperwork set up, I'd be more than happy to take a look at it and let you know what I think. Obviously, you would be more than welcome to black out any personal information (name, address, social security number, ect) and either fax or scan/email it to me. I can run the numbers, let you know what I'd suggest, and make sure that there isn't some fine print that you should be aware of.

However, you get what you pay for, so although I have years of experience in the field and feel confident I will be able to at least point you in the correct direction, I can't be held liable for any advice that I may offer

On a side note, I do most of my lending in Wisconsin, so there very well may be some regional differences that I am not aware of. If there is, your local bank/broker should be able to let you know the laws out there...

Good luck, and if you have any questions, let me know!

Yakk · 10-05-2006, 11:44 AM

NoSoup, what kind of information should oscar0308 post?

As a guess:

Total non-house debt load, value of home, current morgage debt, current monthly payment on house, interest rate on morgage (fixed or adjustable? Fixed for what period?), monthly income (optional), min/max interest rates on the non-house debt load...

NoSoup · 10-06-2006, 03:21 AM

Quote:

Originally Posted by Yakk

NoSoup, what kind of information should oscar0308 post?

As a guess:

Total non-house debt load, value of home, current morgage debt, current monthly payment on house, interest rate on morgage (fixed or adjustable? Fixed for what period?), monthly income (optional), min/max interest rates on the non-house debt load...

Yep, you're off to a great start

It would be best if he could list all montly expenses, as well as the interest rates

Total Monthly Income

Current Value of Home

Current Mortgage (as well as interest rate and payment, as well as the type of load - fixed, ARM, Interest Only, etc.)

Credit score, if he knows it...

10-03-2006, 03:27 PM	#1 (permalink)
oscar0308 Crazy Location: New England	basics on home quity loan? with some bad decisions, some dumb mistakes, some downright ignoring the problem, my wife and i have found ourselves in debt... ALOT of debt. over the last 2 years we have amassed approximately 30K in credit card bills. i dont want to get into how (cause its embarassing and frustrating), but we need to change somethign really quick. we are getting further and further behind mostly because of the interest being acrued each month. i think our best solution would be to take out a home equity loan to pay off the CC bills. we have over 60K in equity so we shouldnt have any problem doing that, but i have very little knowledge in what to look out for, how to get one, where to get one and anything else anyone thinks i should know. so anyone have any advice? and i btw i did do a search, but didnt find anything about this on here, but my apologies if i missed something.

10-03-2006, 04:25 PM	#2 (permalink)
Lady Sage Mistress of Mayhem Location: Canton, Ohio	Most banks will lend around 80% of the homes equity. So take what you would sell your house for divide by 80 and subtract what you owe. That is probably around what you will qualify for. Credit and debt to income plays a big part in the descision process. They also take into consideration how much the loan will lower it to. Be sure you shop around. Get fee lists from the banks. Rates, application fees, PMI, points, closing costs, appraisal fees, pre-payment fees and yearly fees to start. Be an informed applicant, you dont want suprises. Also, be honest. They are gonna pull your credit and see everything anyway, save them the work. If they call you saying they need more information do what you can to get it to them as soon as possible. Hope this helps. __________________ If only closed minds came with closed mouths. Minds are like parachutes, they function best when open. It`s Easier to Change a Condom Than a Diaper Yes, the rumors are true... I actually AM a Witch.

10-04-2006, 09:47 PM	#4 (permalink)
NoSoup Non-Rookie Location: Green Bay, WI	I'm a mortgage broker, so I can hopefully answer any questions you may have. First of all, let me say that there are a ton of programs out there, and depending on your credit, you may actually be able to loan over 100% of your home - however, I would not recommend it. One of the easiest traps to fall into is thinking that what you're pulling out is "free" money - often times people will take out a bit - or sometimes a lot - of extra to go on vacation, buy new furniture, or other things that I wouldn't really recommend. I'd suggest you stick with taking out just enough to cover your credit card bills and any closing costs associated with the loan. As far as things to look out for - for a second mortgage, your biggest concern is going to be fees - whether they are charged up front, worked into the loan, or a prepayment penalty. Also, watch the interest rate you are being offered. If the fees seem unreasonable or the interest rate seems incredibly high and you think that your credit wouldn't warrent such a high rate, go somewhere else, or at the very least shop around. For a second mortgage, I don't think I would recommend going to a broker, but it really depends on your situation. You may want to just check with one to see if it would be more beneficial for you to refinance your first mortgage and just add the balance to that - but be wary, it would likely only be beneficial if you are getting the same or lower interest rate, otherwise I'd just go with the second mortgage. Either way, shop around and get the best deal you can - and work the numbers. One company may offer less in closing costs, but the rate may be much higher than another company, see which would save you more money over the long term. Unless you are able to pay it off extremely quickly, it will likely be more beneficial for you to go with the lower rate. Finally, once you do get all your paperwork set up, I'd be more than happy to take a look at it and let you know what I think. Obviously, you would be more than welcome to black out any personal information (name, address, social security number, ect) and either fax or scan/email it to me. I can run the numbers, let you know what I'd suggest, and make sure that there isn't some fine print that you should be aware of. However, you get what you pay for, so although I have years of experience in the field and feel confident I will be able to at least point you in the correct direction, I can't be held liable for any advice that I may offer On a side note, I do most of my lending in Wisconsin, so there very well may be some regional differences that I am not aware of. If there is, your local bank/broker should be able to let you know the laws out there... Good luck, and if you have any questions, let me know! __________________ I have an aura of reliability and good judgement. Just in case you were wondering...

10-05-2006, 11:44 AM	#5 (permalink)
Yakk Wehret Den Anfängen! Location: Ontario, Canada	NoSoup, what kind of information should oscar0308 post? As a guess: Total non-house debt load, value of home, current morgage debt, current monthly payment on house, interest rate on morgage (fixed or adjustable? Fixed for what period?), monthly income (optional), min/max interest rates on the non-house debt load... __________________ Last edited by JHVH : 10-29-4004 BC at 09:00 PM. Reason: Time for a rest.

10-04-2006, 04:02 PM	#3 (permalink)
eribrav Junkie Location: upstate NY	I would make a chart of monthly expenses. Then compare that with monthly earnings. Slash expenses until you can cover them AND take a bite out of the debt each month. You might even have to work more than you do now. Maybe that sucks, but remember you're dying of self-inflicted financial wounds and you may have to take some unpleasent medicine. That's the way to actually address your problem. Taking out a HEL/HELOC is a way of avoiding the underlying problem. It will also convert your unsecured debt into secured debt. Then if you don't change your ways you will lose your home. Not a good thing.