FundRobot » Equity Funds » what's the difference between a refinance and pulling out equiety,?

Reply
Old   #1 (permalink)
 
Posts: 2,621
Default the difference between a refinance and pulling out equiety,

we have a good a @ %4. VA loan. We have a car loan for 24k at 2.98%. Credit card bills of 15k and a personal at 0% of 7200. Id like to pay off the 15k. Its consolidated but the rate is 14%. What would be best to do. How does it work financially if i just want to pull $ out from our loan. Would my monthly payment on my mortgage go up? Our mortgage is 1087.00 mo. We owe now 170,990. House is worth _225-250's.

Money07 is offline   Reply With Quote
Old   #2 (permalink)
 
Posts: 2,600
Default the difference between a refinance and pulling out equiety,

Refinance means pulling out equity. You need to sit down with a mortgage broker and see what they can do. The credit cards need to be paid off and cut up but keep in mind if you refinance you will be paying that 15k for a long period thereby perhaps costing more. Your house payment will more than likely go up but you won't be paying the credit cards. When you get this resolved, make a decisions to stop buying and start saving. Take good care of the car so it will last much longer than the payments. Put as much as possible towards paying off everything and get debt free. Good luck.
Cash754 is offline   Reply With Quote
more..
Old   #3 (permalink)
 
Posts: 2,600
Default the difference between a refinance and pulling out equiety,

personally cc should be the least of your worries - leaving the equity should be tops take it from someone who lost everything because I was on a sidewalk when a hit and run driver without insurance hit me and disabled me..but hell I never thought it could happen to me
Cash754 is offline   Reply With Quote
Old   #4 (permalink)
 
Posts: 2,656
Default the difference between a refinance and pulling out equiety,

To pull equity out requires that you refinance your mortgage. Basically you refinance for an amount greater than what you owe currently. You can't just add to the balance of an existing loan.

With a conventional loan you are limited to 80% loan to value. That would leave you with about $10k that you could pull out using the $225k estimated value. The VA does allow cash-out re-fi at up to 100% of the home's value, however the costs are higher if you go above 80%. Generally you can roll any closing costs into the loan so you won't need any cash on the table at closing.

If the rate stays the same, taking out a larger loan than you have now will result in higher monthly payments. Rates vary daily and have increased somewhat over the past year but have trended down the past few days. If you can lock in a better rate than you have now, your payment might not change too much but it really depends upon the numbers. Google "loan payment calculator" for plenty of on-line sites where you can estimate your payments.
NewEra50 is offline   Reply With Quote
Old   #5 (permalink)
 
Posts: 2,555
Default the difference between a refinance and pulling out equiety,

To refinance is nothing more than paying off one loan to replace it with another and is done to either take advantage of existing equity (increasing the size of the loan and payment) or to simply get a better interest rate usually resulting in a lower monthly payment.

A smart person would try to consolidate their total debt by using the mortgage equity because the mortgage interest is deductible (unlike the interest paid for any other kind of personal credit), But because credit is typically offered in a variety of rates you truly need to crunch the numbers and be thoughtful of the costs you will also incur from a mortgage refinance to see what makes the most fiscal sense.

Don't forget you also have an option of getting a small second mortgage too that would necessitate an additional payment, but again the interest would be deductible. And don't forget to differentiate the simple interest of a car loan, credit card, etc, compared to the amortized interest of a mortgage loan.

Bottom line, a loan officer at your local bank can help you crunch the numbers to consider your options. Good Luck.
TodayIBUY is offline   Reply With Quote
Old   #6 (permalink)
 
Posts: 2,658
Default the difference between a refinance and pulling out equiety,

You have to refinance to pull out equity.. you can't just add it to exsisting loan. In your case I probably would not advise you to do it since you would have to pay a "subsequent use VA funding fee" to refinance. That is 3.3% of the loan amount, plus other closing costs. I doubt you would be able to get a 4% rate- they've gone up a little since then. You can call any VA lender & they can give you a free analysis of exactly how it would work out, but keep in mind your loan amount and rate will be higher.
Trader4Ever is offline   Reply With Quote
Reply

Bookmarks

Thread Tools