home equity loan vs. refinance
Question: I own a 4 unit place and live in one, rest are rented. Owe about $60,000 on it. Valued at 150,000. I want to get $80,000 to pay off a high interest rate loan and have some bucks to pay bills off. One bank says go for a home equity loan another says a refi is better. What gives?
Answer: This doesn’t apply, I believe, to the original poster, but if you are going to be using the money in dribs and drabs, home equity works better, I think. We did a home equity loan on which we paid off the mortgage (It was at a higher rate) so the h.e. loan is our -only- mortgage. We’ve been using it to pay for the kids’ college costs, and paying it back as fast as we can meanwhile. It’s been very useful, and we don’t have to pay interest on the whole line of credit, just on the part we’re using (which at present is about 30% of the total).
A second mortgage, on the other hand, which gives -another- institution a right to your house, strikes me as something you wouldn’t want to do unless you really had to. And that’s what most home equity loans I see advertised sound like.
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Filed under: Home Equity Loan
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