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Hi, we are consider to do a cashout refinance due to start our new business.
Our existing home loan amount is 110,000 for 5.25% fixed. We also have equity line of credit for $100,000 and current rate is 5%. Our home value is about $580,000.
lone officer recommend to combine the two and refinance for 40years fix rateat 6.5% to maximize our cashout $217,000. Is this good call?

she also recommend to have an appraisal right now, because the house sales will drop after september,
if you have any foreclosure or short sale near my property, the appraisal price will dropped easily. We do not need money right now, but she said appraisal is good for 3 month. Is this true?

shayneroy · Joined: 12 Nov 2007 Posts: 51 21.08 Dollars($)

Hi,

Firstly, this thread is for the first time home buyer, you must have posted here accidentally; you should have actually posted in the “Looking for mortgage again” forum.

Now, coming to your question – To combine the mortgages or not to combine mortgages completely depends on your discretion because I see that you have a fairly good interest rate on your HELOC and when you would combine the mortgages and refinance, your interest payment is higher towards your interest than the principal. Hence, you would actually reset the clock.

Also, combining the loans at 6.25% is not going to save you money if you already have a 5% at a fixed rate for your second loan. However, if it’s an adjustable rate, it wouldn’t be a bad idea to combine them together at this juncture.

Yes, home appraisal is certainly valid for 3 months with certain lending institutions. However, few lenders would always want to use their own appraiser. So, getting an appraisal ahead of time wouldn’t be a great idea. The information provided to you that the home values would drop after September has no factual evidence and not reliable.

smckaybiz · Posted: Mon Aug 18, 2008 6:54 pm Post subject:

A suggestion if I may...

I think you're in good shape with your first mortgage at 5.25. I would considering rewriting the HELOC. I know the lender I work for will do 80%LTV which would put the limit at about 350K. You also could qualify for a below prime rate but the real key is finding a lender that gives you the option to lock in an interest rate on your new HELOC! Not only do most lenders waive all closing costs with a HELOC but this would give you the option to make interest only payments now if needs be to keep your monthly payment to a minimum than lock in a rate with amortized payments once your biz gets off the ground.

Hope you got a solid biz plan Laughing

!!!

Whichever way you choose best of luck

apexoffice · Posted: Tue Aug 19, 2008 12:35 pm Post subject:

One other note on the appraisal. The length of time that a lender is willing to accept an appraisal will vary. As a technical fact, an appraisal is only good for one day (the effective date of the appraisal, usually the date it was inspected by the appraiser). The reasoning is that something could occur the very next day which would have a significant influence on value. In a declining market, depending on the rate of decline, the lender may reconsider the use of a 3 month old appraisal, or at least ask the appraiser for an update or recertification of value.

Guest

OOPS, I POSTED WRONG PLACE.
THANK YOU FOR YOUR ALL ADVICED!!!

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