A home equity loan or a new mortgage on the condo?

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I own a 130K home which is already paid off. My score is 657 and it would increase more shortly. I've rented my home and I stay in an apartment on which the lease expires within a month. I've never been late on my rental payments. I found a condo recently with low fees monthly and it is only worth 50K. can I qualify for a home equity loan for the condo with a 6.5-7% interest rate? should I go for an equity loan or simply a new loan will do? With the home equity loan, there is no closing cost while the mortgage would require me to pay at least 2.5K in closing fees. But it would be better if the loan is more than 7% rate of interest..anything more would be hard to manage I suppose. Is it possible? Any thoughts??

sara · Posted: Tue Sep 04, 2007 2:52 am Post subject: RE: is home equity loan possible?

Hi Carter,

Welcome to the forums.

It will not be possible for you to get a home equity loan because for that you will have to stay in the property which you're not currently. Moreover, there's no equity in the condo, so the question of taking a loan against it does not arise. But yes, you can get a mortgage against the new condo or the paid off home and use the cash for the condo. But you need to start off shopping for a suitable loan ands go for a fixed rate if you don't have any plans of relocating within a few years.

Take Care

larry · Joined: 27 Jun 2007 Posts: 3328 473.51 Dollars($)

Hi Carter,

For getting a loan against the condo, you need to shop around with lenders because so far I know, not many mortgage companies offer loans for a property like condominium.

Before qualifying you for the loan, lender will do a lot of research on your condo.

Guest 0.10 Dollars($)

>>> With the home equity loan, there is no closing cost while the mortgage would require me to pay at least 2.5K in closing fees.

nowadays there are many mortgages with zero closing costs, you can look for such options.

Caron

Hi carter,

What I can understand is the closing costs will be financed to you along with the loan amount. But such loans which have the costs included in them are usually available at high rates of interest. And, moreover, if there's no equity in the property, then it's better to avoid going for such loans. You do get 125% loans and the like but then your loan amount exceeds the property value and what do you do if you can't pay somewhere down the line..you simply lose your home if there isn't any way out and most of the times, there isn't in such cases. So, better go for a new loan on your condo.

Good luck Smile

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