mortgage
Question: In general, the amount owed on a first mortgage far outweighs the equity in a >house. Though the OP MIGHT be an exception, the limit of the typical HE loan or >HELOC obviates its replacing a first mortgage. A “refinancing” of the first >mortgage is most often necessary. Also, it is VERY unusual to find a HELOC or HE Loan that is cheaper than a >replacement first mortgage. Since a HELOC or HE Loan is, by definition, >subordinate to an existing mortgage, the lender carries a higher risk — though >sometimes marginally so.
Answer: That might traditionally be true, but these are not traditional times. I refinanced my house last year by taking out a home equity loan and using the loan proceeds to pay off the first mortgage. This was the specific intent of the home equity loan, and both I and the bank providing the loan went into the deal knowing that up front. Also traditionally true, and again these are not traditional times and on this specific point, the times have not been traditional for a number of years. I took out my first mortgage about thirteen years ago. Five years ago I took out an equity loan to put in a pool and the interest rate was a couple of points less than than the first mortgage. Last year I took out another equity loan to pay off the first mortgage, and the rate was lower than both the original first mortgage and the pool loan. Total fees on the last loan were $75.00.
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