Posted on: 18th Sep, 2010 02:44 pm
i own a cooperative apartment in new york city (manhattan). the value of the apartment is approx. $650,000. i intend to live in the apartment for 5 years.
i purchased the apartment in december 2003 taking out a 30 year loan for $230,000, at the fixed rate of 6.375%. i make monthly payments of $1,441. the balance on my exiting loan is $39,000.
my income is currently around $225,000 and when combined with my wife's the total income is $310,000 per year.
i want to purchase a vacation home located in new york state. i intend to purchase the second home at $250,000.
in order to pay for the second home, i want to use the equity on my apartment.
questions:
1. what is the difference between second mortgage, refinance and home equity loan?
2. which of the three is better for me? is there a fourth or even fifth instrument that may suit me even better?
3. how much are the closing costs for each?
thank you.
i purchased the apartment in december 2003 taking out a 30 year loan for $230,000, at the fixed rate of 6.375%. i make monthly payments of $1,441. the balance on my exiting loan is $39,000.
my income is currently around $225,000 and when combined with my wife's the total income is $310,000 per year.
i want to purchase a vacation home located in new york state. i intend to purchase the second home at $250,000.
in order to pay for the second home, i want to use the equity on my apartment.
questions:
1. what is the difference between second mortgage, refinance and home equity loan?
2. which of the three is better for me? is there a fourth or even fifth instrument that may suit me even better?
3. how much are the closing costs for each?
thank you.
Hi fran,
Refinance is completely a new mortgage which you can use to pay off your existing mortgage in order to take advantage of the better loan terms and conditions. When you already have a mortgage and want to take out another one, then it will be known as a second mortgage. The home equity loan is a type of second mortgage. If you want to take out a second mortgage or refinance the loan, you should have equity in your property. As you've equity in your property, you should refinance your existing mortgage and take a cash out. The closing costs may vary from state to state and from lender to lender.
Thanks
Refinance is completely a new mortgage which you can use to pay off your existing mortgage in order to take advantage of the better loan terms and conditions. When you already have a mortgage and want to take out another one, then it will be known as a second mortgage. The home equity loan is a type of second mortgage. If you want to take out a second mortgage or refinance the loan, you should have equity in your property. As you've equity in your property, you should refinance your existing mortgage and take a cash out. The closing costs may vary from state to state and from lender to lender.
Thanks
How much do you want to pull out? I always suggest refinancing your current first position and taking equity out. Heloc's are adjustable and can be cut by the bank at any point if they feel the value is declining etc. Second mortgages usually come with a much higher interest rate vs. first positions. Right now, Rates on first positions are phenomenal and you have a tremendous amount of equity to use.
