Jul 24, 2009 12:13 am US/Pacific
Getting A New Mortgage Rate
(CBS13)
Question: I currently have a 30 year home equity loan at about 6.5% for $197,000, my house is valued at about $375,000. i am only one year into my loan but i would like to get a better interest rate, the problem is my wife has been on disability for over a year so we only have one income to show and it is not enough to qualify for a new rate. Do you have any suggestions?
- Jack
Answer: Based upon what you've stated, I think you're going to have a tough time getting a mortgage the conventional way. A creative way of going about this would be as follows:
Determine how much your lender will lend you based upon your income and your wife's disability. At the same time refer to your retirement savings plan (401k, 403b, etc). Inquire with your plan administrator as to the maximum loan amount you would be eligible to withdraw. If the retirement plan loan amount is enough to pay down your mortgage to the point of refinancing then do so. Once you have the new mortgage, I would then go back to your community bank, and secure a home equity loan to pay back your retirement account. This may seem like a cumbersome process, but it may work in allowing you to bring down the weighted average interest rate you're currently paying on your home. The hypothetical end result may be a first mortgage for $160,000 at 5% with a Home Equity Loan for $37,000 at 6.25%. Before entering in to these transactions, talk with your local community bank regarding the Home Equity Loan to insure that you will qualify once the other two transactions has been completed. With nearly 50% equity, I think a local bank would be willing to extend you the loan. You may have to shop around though. Good luck!
- David___________________
Money Matters is provided by:
David Schauer, CFA, MSFA, CFP®Financial PlannerHanson McClainE-mail David with your questions
(© MMIX, CBS Broadcasting Inc. All Rights Reserved.)
Click to enlarge
Stumble It!
Comments