Posted on: 18th Jun, 2008 05:37 pm
I currently have a 5-Year ARM which is set to increase in 8/09. My current interest rate on my ARM is 5.5%, and I have an outstanding balance of $163,565.68.
I also have a HELOC with an outstanding balance of $20,496.26 and a credit limit of $32,550. Currently, the HELOC has an interest rate of 6.0%...but obviously fluctuates with interest rate changes.
So, my question is…
I want to pull out $100,000 of equity in my house, which is currently valued at $300,000. Obviously, I would like to do this in a manner that will give me the lowest long-term interest rate, and thus the lowest monthly payments. It would seem best to combine my 5-Year ARM, HELOC and equity payout into one 30-Year Fixed Mortgage…but that would be at an interest rate higher than my current 5.5%. But then my 5-Year ARM would go up in a year anyway, so maybe it’s better to act now before interest rates get higher? Or maybe I just add to my HELOC?
What to do?
I also have a HELOC with an outstanding balance of $20,496.26 and a credit limit of $32,550. Currently, the HELOC has an interest rate of 6.0%...but obviously fluctuates with interest rate changes.
So, my question is…
I want to pull out $100,000 of equity in my house, which is currently valued at $300,000. Obviously, I would like to do this in a manner that will give me the lowest long-term interest rate, and thus the lowest monthly payments. It would seem best to combine my 5-Year ARM, HELOC and equity payout into one 30-Year Fixed Mortgage…but that would be at an interest rate higher than my current 5.5%. But then my 5-Year ARM would go up in a year anyway, so maybe it’s better to act now before interest rates get higher? Or maybe I just add to my HELOC?
What to do?
Sounds like you know the options. I do not think you will be able to add to the HELOC as most lenders doing these loans have stopped lending to high loan to values. Actually you best chance for getting that much cash is an FHA loan. An FHA loan will allow you to refi up to 95% ($285k on $300k appraised value)
It will NOT be at an interest rate as low as what you have now but as you have said your rate will be adjusting soon.
Because you will exceed the 80% threshold there is no way to get around Mortgage Insurance and FHA has the lowest monthly payment (they do add 1.5% up front to allow for this)
To qualify your scores will not matter as much as your last 12 months of credit history. Your debt to income will need to be in the low 40's
Good Luck
Brian
It will NOT be at an interest rate as low as what you have now but as you have said your rate will be adjusting soon.
Because you will exceed the 80% threshold there is no way to get around Mortgage Insurance and FHA has the lowest monthly payment (they do add 1.5% up front to allow for this)
To qualify your scores will not matter as much as your last 12 months of credit history. Your debt to income will need to be in the low 40's
Good Luck
Brian
Hi lorivanrum.
Welcome to the forum.
Refinancing with 30 year fixed rate mortgage is a good option for you to combine the 5-Year ARM & HELOC as you know the 5 year arm will go up. Talk to your lender and see if he can approve you for refinancing. If not then you can also shop for other lenders.
You can even seek no-obligation free mortgage quote from the community lenders to help you refinancing.
Feel free to ask if you have any further questions.
Best of luck,
Larry
Welcome to the forum.
Refinancing with 30 year fixed rate mortgage is a good option for you to combine the 5-Year ARM & HELOC as you know the 5 year arm will go up. Talk to your lender and see if he can approve you for refinancing. If not then you can also shop for other lenders.
You can even seek no-obligation free mortgage quote from the community lenders to help you refinancing.
Feel free to ask if you have any further questions.
Best of luck,
Larry
