Question:

2 mortgages, in the midst of remodel, need more cash

by Guest7412 | earlier

Hello, We are first time remodelers and did not fully realize how expensive it can be. We need advice on how to get $30-40,000 more. We have excellent credit, and good, steady income.
First mortgage is 47,000 @ 6.25%, 15 yr w/7 yrs left. Second mortgage, which we just took out in February of this year for the remodeling is 121,000 @6.25, 15 yr. What our loan company suggested was taking out a H.E. line of credit for 80,000 and pay off the first mortgage with that. An online mortgage service suggested consolidating with cash out. We are looking for unbiased advice about what is the best strategy. We intend on living here for 4-5 years more. Our current home value is about 430,000. T

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Angelina

First, let's proceed over what NOT to do: Do not refinance your first mortgage into an $80,000 dwelling equity line of credit. Why? Because those borrowings are joined to the major rate which actually stands at 8.00%, and they manage not have yearly caps. Presumably, such lend could be at 10.00% by next year.
The recommendations you've obtained from the net mortgage service can be more sensible and can understand well. If you pursue it, you will have a new first mortgage of $200,000 to 210,000 which would give you the additional cash you require to entire the job.
Although taking out 15-year borrowings (instead of 30 years) is enticing, the truth is that your monthly fee on them is 20 - 30% higher than you'd yield on a 30 year loan. My own fondness is to take out a 30-year lend, and voluntarily make higher payments in alignment to yield it off in 15 years. This procedure devotes you more flexibility - if you proceed through some strong times, you can proceed back to the 30-year payments.

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