Question : Is it better to borrow against home equity when you still have a first mortgage?
Our house will be paid off next year. We have some major home improvements to do in the near future. Will borrowing costs be more if we borrow against the equity after the first mortgage is paid off, or does it matter?
- asked by GoGators
All Answers:
Answer #1
It all depends on the specific terms. Sounds likeyou have tons of equity. Odds are you can get anew first mortgage, taking out enough cash tocover the improvements, and you will be betteroff.
- answered by Omaha
Answer #2
It may be more cost effective to refinance yourfirst mortgage for the cash you are going to needto do the improvements unless you are planning onrepaying the improvement funds in short term. This is because 2nd mortgages and equity lineshave higher interest rates.An experienced mortgagebanker willgive you a comparison of all of youroptions so that you may make an informed decision.
- answered by mazziatplay
Answer #3
If the house is almost paid off, it will probablybe cheaper to take a new first mortgage to replacethe present one. First loans are typicallycheaper than second ones. Go see your banker andget some quotes.
- answered by rhsaunders
Answer #4
refinance the first mortgage. the rate will belower and you'll only have to make one payment permonth. You'll also get a broader range of paymentoptions depending on the amount of theloan...short term to long term. congratulationson the near term payoff!
- answered by therainbowseeker
Answer #5
It doesn't matter. It's a second loan thatdoesn't affect the 1st. You might considerrefinancing your 1st & getting equity out. It maybe a lower interest rate that way.
- answered by Deb S
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