Should I get home improvement loan or refinance with cash out?

I want to refinance my home to take advantage of lower interests rates. I also want to renovate my house since it has severe structural problems. Should I refinance and get cash out to use for home improvement or should I refinance without cash out and get a separate home improvement loan? What is the difference between the two scenarios?

Responses:

A refinance with cash out would save you money in the long run. The interest rate would be lower for a 1st mortgage. If you refinanced for a lower interest rate, you would be required to pay for the refinance and other closing cost. Now if you turned around immediately and got a second mortgage or a Home Equity Line of Credit HELOC you would once again be required to pay for the loan as well as any related closing cost. On this 2nd mortgage the interest rate would be 2% - 3% higher. For any legal or tax matters you should consult with your attorney or tax consultant. I hope this has been of some use to you, good luck. "FIGHT ON"
If your 1st is strictly purchase money, you never got additional cash, you should probably keep that one separate because straight refis have better rates than cash out or cash out refis. If your home has severe structural problems, though, you may be in trouble. The appraisal has to say the property is in at least average condition. Structural problems may have to be remedied prior to refiance. It really depends on the lender and how serious the issues are. If you have already done a cash out refi, you may find that the rate for the whole amount is ok. Not all lenders do a "home improvement" loan. Some would only offer you a home equity loan or line of credit. On a home improvement loan, we consider it to be a "value added" instrument, so we add the cost of the improvements to the appraised value of the property. Home equity products will not do that. Basically, you need to compare rates. Call your regular bank, a big bank and a little local bank, and see what kind of rates they have. It would be helpful to pull your credit reports first so you have an idea of your credit score. That will influence the rate, as will the total loan to value
it all depends on the equity in the home and how much you need for the repairs. Conforming allows cash out up to 80% but huge hits to the rate to get the cash. FHA insured loans allow up to 85% cash out now but you have an up front MIP fee that can be financed in as well as a monthly MIP fee. If you need more than that then you must get an FHA 203K loan for these repairs. Now they will not finance wants but true repairs with estimates in the file. They wil hold these funds in escrow till the work has been completed and inspected I am a mortgage banker in TN

Tags: refinance, advantage, closing, immediately, related

Follow this dicussion..

Related Images:

Knowledge Base

Does anyone know any reputable bad credit home loan dealers?

my partner and i both have bad credit. we want to know if there are any reputable bad credit home loan dealers out there that will help us get a home loan with little to no deposit required. we are both employed full time but our finances are being eaten (home loan credit)

What Credit score do I need to get approved for a home loan refinance?

i am hoping to refinance my home loan to a lower rate. i understand that applying for a new loan is a "hard inquiry" that will lower my credit score, so i do not want to apply unless i am reasonably sure of being approved. what score range would i (bad credit home loan)

What kind of home loan interest rate could I get with a bankruptcy on my record?

i have a chapter 7 bankruptcy on my record from 2003, but i have no debt and a credit score of about 700. and i have $20, 000 for a down payment. if i got a home loan, would the bankruptcy make a huge difference in the interest rate? how (home loan rate)

Related Images:

Knowledge Base: Home Loan

What are the key factors in obtaining a home mortgage loan?

my credit is not bad or fair. it's good, just below excellent. how good does your credit have to be and what other factors are key to successfully obtaining a home mortgage loan?. hi ronnie, your credit has to be at least a 640, so i am uming you will (home loan rate)

How do we get a guaranteed bad credit home loan to purchase a new home with no cosigner?

there is no such thing. you have a better chance finding bigfoot or elvis!. you find that then you are the luckiest person. home mortgage loan refers to the loan lent to someone who buys a house from a developer, makes the initial payment and lets the bank to pay (home loan refinance)

What is the maximum limit of home loan credit score rating could help avail?

do not wander here and there just visit: antifraudreport.com. hi if you looking for a legitimate online loans in 1 hour. once approved your loan will be transferred directly to your checking account promptly, and securely. now you will be able to use the cash for all your necessities. legitimatepaydayloans.net (home loan rate)

Bad credit Home loan, How can you get a home loan with really poor credit?

my husband, myself and our kids, are living with his parents, for the past six months. we both have very poor credit and are in desparate need of our own place. we now can afford our own place but cannot get a loan to purchase one. we have down payment (home loan credit)

Can I use my current owned home as collateral on new home mortgage loan?

my family and i live in a home legally donated to us by my father. we have ownership. can we use this home as collateral for a mortgage loan on another home in another state? if so, how does that work?. is the home worth more than the home you (home loan refinance)

Related Images:

Knowledge Base: Home Loan Refinance

Can I refinance my home loan if the the value of the home has gone down over the last year?

i want to refinance my home loan to get a better rate. i purchased the home 1 year ago and currently have a 30 year fixed at 7. 0%. i bought the house for 475, 000 an currenty owe 423, 000. i worried that the home prices have droped so (home loan refinance)

Is now a good time to refinance my home loan?

do you think the home interest rates will drop? i currently have a 30 year home loan at 6. 375%. should i refinance my home loan to a lower rate if possible?. not worth the effort at this time. rates need to fall about 2% for you to recoup the (home loan refinance)

Should I get home improvement loan or refinance with cash out?

i want to refinance my home to take advantage of lower interests rates. i also want to renovate my house since it has severe structural problems. should i refinance and get cash out to use for home improvement or should i refinance without cash out and get a separate home (home loan refinance)

What are the fha home loan rates like as of now? I am looking to use a fha refinance for my current home. ?

fha refinance loans seem like my best option at the time for refinancing my home loan. can anyone provide me with some information pertaining to the current fha rates?. 15 yr is 4. 75. 4. 875% - 5. 00% on a 30 year mortgage is about the lowest going rate (home loan refinance)

What Credit score do I need to get approved for a home loan refinance?