Home eq Loan vs. mortgage
Question: >AFAIK, you cannot “change” a conventional mortgage to a HE loan. A HE loan is >made on the equity you have accumulated by paying down your first mortgage.
>I doubt you can do better than what you already have, given your circumstances.
Answer: The equity in the Home Equity loan is based on the appraised value of the house less any outstanding indebtedness that is guaranteed by the value of the property – not the equity you have accumulated by paying down the first mortgage (although some of the equity may have accrued from this).
If your equity in the house is equal to more than the outstanding balance of your current mortgage, you should be able to refinance your loan and use the proceeds of the Home Equity loan to retire your balloon mortgage, hold only the HE loan.
When we purchased our present home we paid in full with cash. We then obtained an Home Equity line of Credit of $100,000 based on our equity in the house and subsequently used it to pay college tuition costs and purchase two new cars using the line of credit. There never was a mortgage on the house other than the Home Equity line of credit.
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