Michael J Roberts asked:




For home-owners wishing to release some of the equity from their homes, cash out refinance has become an increasingly popular alternative to home equity loans.

But what exactly is cash out refinancing?

The term “Cash out refinancing” refers to a transaction in which a new mortgage amount is borrowed that is greater than the existing mortgage amount. Enabling you to pay of your existing mortgage and “cash out” the leftover amount.

For example, if you owe $100,000 on a home currently valued at $240,000, then you have $140,000 in equity. Provided your new mortgage loan is larger than $100,000, you can use the refinance loan to pay off what’s left of your original mortgage and pocket the difference.

Why release equity?

Many people use this released equity to pay off consumer debts such as credit cards, store cards or personal loans. This certainly has its advantages. Paying off these debts using your mortgage can significantly reduce the monthly interest rate from 20% (or higher) to as low 5 to 9%.

Home improvements

Another popular reason that many opt for cash out refinance loans is to make improvements to their home. Choosing to invest some of the released equity back into your property is a very wise decision. Carrying out major home improvements increases your homes value and lowers the loan to value ratio. This is a great way to regain some of the equity that has already been released.

Future investments

For some home-owners a cash out remortgage can be beneficial for investment purposes. If you can invest your money elsewhere at a better rate of return than the interest rate charged on the remortgage, then this cab be a worthwhile route.

Remember, like all other types of loan, refinancing a mortgage has its costs and you may be charged a higher rate of interest by your lender. Before taking on a cash out remortgage, obtain some mortgage quotes and make a risk-based assessment (taking into account all hidden costs) to work out whether extracting equity from your home is economical.

Joe

George D. Clark asked:




Of course you wouldn’t want to lose your home and so a 40 year refinance for your existing mortgage loan may be a very attractive and appealing alternative to keep your house and make sure your family are safe and secure. Though you may dislike the idea of having to owe other people money for such a long time, you may find that your low salary rate isn’t enough to make you qualify for short term loans. But then again, that isn’t just the single factor to like a 40 year loan scheme. There are more.

Yes, a short term loan may come in lower interest rates but it does make you pay rather high monthly payments that you may not be able to afford especially when you have your monthly expenses to consider as well. And so if you have unsettled bills (like your house loan for example) you may want to consider taking out a long term loan that will allow you to pay slowly but surely.

This is the very reason why a long term loan such a 40 year repayment or refinancing scheme has become so popular with many people. It definitely allows them to buy their dream house without having to worry about high monthly payments that they may not manage with their low monthly salary.

You may even take advantage of bad credit loans to refinance your mortgage. There are so many lending institutions out there that are more than willing to take a chance on you but then again you will have to shoulder a higher interest rate. But of course you can definitely manage to pay up the loan in due time if you would only plan your financial activities. If you would only pay religiously, without skipping a month and even pay on time, you will see that a long term loan may not be bad after all.

Charlotte

rubie00 asked:


When my house was worth something a few years ago I paid of an existing mortgage with a 30year fixed home equity loan. I also took out a small home equity loan for improvements. I had a ton of equity but now i don’t. House has been on market for 3 years since getting divorced and no offers. I have it priced well below what i owe but still cant lower it enough(don’t have enough money to pay the difference) My ex-husband lost his job so he’s unable to pay his portion on the vacant house. Can I do a deed in lieu of foreclosure on home equity loans? Is there a way to prevent oweing after foreclosure?
1) if it’s a first lien on the property by virtue of paying off the original mortgage, yes it can.
yes it is first lien

(2) Deed in lieu would be up to your lender; and you might still owe the difference between sale price and fees and what you owe.
which is why i’m giving my house back because i can’t come up with the difference of what i owe, what the house is worth and what i can sell it for. I owe 203k and its listed for 170k which after commission and fees i would need 40k to pay off loan. However, that would be that i actually got an offer. For the house to sale it needs to be listed around 159k

FELIX