Loan question

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Submitted by XBoxBoy on June 1, 2022 - 1:18pm

My situation is a little unusual. My wife and I own two houses, both of which are fully paid for. (No mortgage) But we'd like to borrow some money to have a cushion with some remodeling we plan to do. We'd like to get a loan for about $500,000. (Well below the value of either house) Our income is good, and credit scores are good. Don't really want a long term (30 yr) loan. What loan products would be good to consider? How hard is it to get a mortgage after you own the property. (There's no sale going on here) Who would you recommend talking to to get the loan?

Thanks,
XboxBoy

Submitted by Coronita on June 1, 2022 - 3:37pm.

I didn't have a problem doing a cash out refi for $550k. My mortgage rate was maybe .25% higher than others with a cash out. So it was 3% for 30 years.

If you think you'll pay it off in like 5 or 7 years, you might as well do a 5/1 or 7/1 and just pay it off before the loan resets.

Submitted by sdduuuude on June 2, 2022 - 8:46am.

I'm told that cash-out refis on condos are the most difficult loans to get, especially if you are self-employed. Houses, not as difficult.

Of course, the chance of success varies dramatically based on your income, income history, current debt level, current monthly payments on debt, loan-to-value ratio, etc. With good numbers, it shouldn't be a problem.

Just be prepared to dig up endless bank statements, trust documents, etc. and expect to write letters of explanation for every little detail. That is the difficult part - the time it takes to satisfy all the requests.

Consider a HELOC (Home Equity Line of Credit) where you only make payments on money you have used. You write checks off the HELOC which add to the loan amount. Usually these are variable rate loans so you have to be careful with rising interest rates. But, you can have that cushion available without making monthly payments.

Submitted by sdrealtor on June 2, 2022 - 2:22pm.

I'll PM you the answer

Submitted by gzz on June 2, 2022 - 3:16pm.

You will probably get a better rate on your primary residence.

Zillow mortgage will give you an idea of what the cheapest online lenders are offering. You can then apply through zillow or just contact the company directly you find on Zillow through their separate website.

It sounds like a HELOC that is used as needed rather than a cash-out 500k mortgage may suit you better.

Double check this, but I believe keeping the loan 100% for renovations and other housing related expenses allows the interest to be deductible.

Rate increases mean refi activity is down like 80%, so it should be a smooth process with the lenders being slow.

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