Mortgage Loans - Tips & Tricks » Home Equity

Trying to Refinance to a Lower Interest Rate – My Refinance Was Denied

Braxton Haines — Wed, 21 Jan 2009 07:56:13 +0000

With interest rates in the high 4-percents to low 5-percents, now is the perfect time to refinance, especially for those of you who may currently have an adjustable rate loan. If you’re looking to get out of your adjustable rate loan, there is no better time than the present to get yourself into a fixed loan. However, the biggest problem with trying to refinance right now is that many homes have dropped in value, so the homeowners equity may not be what it needs to in order to refinance.

Take my case for instance. When I bought my condo 5 years ago, I paid $290K for it, and at the peak of the market, its value approached $475K, but right now, it’s value is only appraising at about $250K. This sucks, because in order to refinance, I can only borrow 80% of my homes equity, or $200K if my home appraised at $250K exactly. The banks don’t take into consideration that I’ve been on time with ever mortgage payment over the last 5 years, and that I’ve even made extra principal payments in some of those years in order to accelerate my mortgage.

If you have enough equity in your house, now is the time to refinance, but if your home value has dropped, as most homes in the Southern California area have over the past year, you just may find yourself in a situation similar to mine – having your home refinance denied. It’s a very unfortunate situation when someone like myself who takes pride in having great credit has a refinance declined because of the current state of the market.

I’m currently looking at a couple other options that will help me get refinanced, and I’ll keep you all posted if I find a way to lower my interest rate.

2nd Mortgages – Second Mortgage Interest Rates and Refinancing 2nd Mortgages

Braxton Haines — Sat, 15 Nov 2008 09:10:35 +0000

A second mortgage (2nd mortgage) is a loan taken against your home in addition to the primary mortgage. The equity in your home is used as the collateral for the loan in the second mortgage. Second mortgages are often called subordinate loans because they come 2nd to a primary loan, meaning that if a borrower defaults on the loans, the primary loan is to be paid off prior to the balance second mortgage loan. It is for this reason that second mortgages (subordinate loans) are considered riskier for lenders, and therefore typically come with a higher interest rate.

When is a 2nd mortgage right for you?

There could be any number of reasons why a person would consider taking out a second mortgage. If you have a large amount of other high interest debt, such as credit card debt, it may make sense to take out a second home mortgage to payoff this debt. You may want to use the second mortgage to make an investment, whether it be in the stock market or a vacation property. You may just want to live above your means and buy a boat. The use of the second mortgage will in the end, be up to you. When I bought my first condo, I took out a second mortgage loan in order to avoid paying PMI (private mortgage insurance).

Interest Rates for Second Mortgages

As mentioned above, the interest rate on a second mortgage will typically be higher than the interest rate of a primary loan due to the fact that a default, the first loan is paid of prior to the 2nd. The interest rate will also be determined by the amount of the loan – the larger the percentage of home equity that you are borrowing against, the higher you can expect the interest rate to be.

Before applying for a second mortgage, make sure you talk to your broker and understand all of the details of the loan. Remember that no matter what the amount of the 2nd mortgage is, even if it is only a fraction of your primary mortgage, if you default on the 2nd mortgage, you could lose your home. Be sure to do your research and have a solid knowledge of your budget prior to securing a second mortgage.

My Custom Closets Are Installed – My House Is Already Increasing In Value

Braxton Haines — Wed, 06 Aug 2008 23:22:41 +0000

So after 8 hours of grueling labor last Saturday, my custom closets are finally installed. That was part of the deal for me being able to get such a huge discount on my closets – I had to do all of the demo prior to the install, and I had to help install. In my opinion, it was entirely worth it to help demo and install the closets to get a price to about half of what it would have been.

I live in a condo that I paid $290K for. About 2 years ago, I started getting some quotes for having custom closets put into our master bedroom. Most quotes came in at $5-$6,000. Though that was only about 2-2.5% of the cost of the house, I couldn’t justify it to myself to actually spend that much on our closets, so here I found myself 2 years later. I have a friend who just bought a franchise from a closet company, so I asked for a quote, then I asked for the quote with me providing the labor. To my surprise, the quote went down considerably, so I decided to just go ahead and pull the trigger. The conditions:

Demolition & Prep
I do all the demolition and have the closet empty and ready to go at the time of installation. This was actually harder than I expected… not the demolition part… I love me some demo… the hard part was getting all of our clothes out. You would be amazed at how much stuff piles up inside your closet over the course of 5 years. Once the clothes were out, demo was quick and easy, then we put on a fresh coat of paint, a nuetral color so that the next owner of the house wouldn’t have to repaint over some hideous color.
Help With Installation
I don’t mind getting my hands dirty and doing some wrenching, so this was just like an added bonus for me. You mean you’re going to charge me less than half AND I get to help??? No complaints here.

So the closets are done, I can already see the value of my home increasing. Good stuff. Anybody else out there have custom closets? Do you like them? Would you do it again if you had the chance?