Posted on: 08th Feb, 2010 08:29 am
we took out an equity loan 6 years ago thru the bank when we purcashed our home and are still paying on it. now with interests rates much lower we want to do a cashout refinance on our mortgage, will the equity loan hender our mortgage lender from doing this? our home should appraise at $40,000 more than mortgage payoff, but the equity loan is another $10,000 to payoff. thank you
hi,
there has to be enough equity in the property for you to refinance cash out. if the current value of the home is more than what you owe on the primary mortgage and the home equity loan, you should not have any problem in qualifying for a cash-out refinance. however, you need to have good credit score and income to get approved for the refinance. so, if there's enough equity in the property, you can pay off both the mortgage and the equity loan with the proceeds from the cash-out refinance.
there has to be enough equity in the property for you to refinance cash out. if the current value of the home is more than what you owe on the primary mortgage and the home equity loan, you should not have any problem in qualifying for a cash-out refinance. however, you need to have good credit score and income to get approved for the refinance. so, if there's enough equity in the property, you can pay off both the mortgage and the equity loan with the proceeds from the cash-out refinance.
If you have sufficient equity in the home you could get a cash out refinance - it may even make sense to use some of the cash out refinance to pay down the equity loan, which will most likely be at a higer interest rate.
ordinary refinance guidelines allow you to borrow up to 85% of the value of the home, and paying off all mortgages in the process. your home equity loan might get resubordinated, depending on your new first mortgage lender and depending on your value vis a vis overall debt.
