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another approach

Posted on: 28th Jan, 2007 06:48 am
i asked earlier about what type of loan i should do when i want to do repairs/upgrades on an oregon property i own. the topic was "what type of loan" and the responses to my inquiry was super . now i am thinking that yes i want to sell the property and yes we can absorb the heloc if we decide to go that route but.....
what if i was to just refinance the whole thing and have lower payments? higher interest rates don't concern me since i plan on selling in the first place and i don't have to raise any rental fees to the existing tenant . i'm thinking if the place don't sell right away i am not pulling anything extra out of my pocket at the moment.
so what would be the drawback to refinance instead of doing a second in this case? i already thought about a prepayment penalty type of loan which i would stay away from.
would the finance charge kill me at selling time?
last but not least i have the question of what taxes i will be looking at after sale?
thanks for you help!
Hi magnum,

Welcome back.

Usually a refinance requires much higher closing costs than a heloc. A refinance will allow you to borrow only once while using a heloc, you can withdraw funds whenever you require. The only thing is that you can borrow up to a certain limit in total. The heloc acts like a revolving credit card.

There is also the concept of prepayment penalty, that is, an amount you may have to pay when you refinance to pay off your existing loan before the repayment period ends.

Whether you"ll go for a refinance or a heloc will depend upon your financial goals and needs. Also, how long you plan to stay in the home also matters because if you go for a refinance, you may want to recover the closing costs by saving in interest with the help of a low rate.


Posted on: 28th Jan, 2007 08:14 am
The tax that you pay after the sale will be the capital gains tax based upon the profit you earn through the sale.

You have to find out if you qualify for the exemption allowed for single ($250000) and married filers ($500000). If that is so, then you need not pay tax on the first $250000 or $500000 of the profit deending upon whether you are single or married.
Posted on: 28th Jan, 2007 08:30 am
Hi Alex
This is not our primary residence so does that exemption still apply?
Posted on: 28th Jan, 2007 08:36 am
No magnum, the exemption is not allowed for primary residence.
Posted on: 29th Jan, 2007 01:16 am
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