autigr14
New Poster
Cash: $ 0.45
Posts: 2
Joined: 24 Jan 2010
Location: Alabama
|
| Home equity loan |
 |
|
Hi,
First of all, I'm new here so, hello from Southeast Alabama!
My question is in regard to a home equity loan. We are selling our current home and have found an excellent deal on a larger house. The house was foreclosed on and we have a contract on the house for about $25K less than what the builder had in it (e.g. our mortgage will be for around $258K and the builder's cost was ~$285K). The house was put on the market for nearly $360K and the houses around this one are going for above $320k, so my prediction is that we will have around $60-$80K in equity pretty quickly.
I also understand that initial appraisals will be very conservative because some appraisers were sued when the housing bubble burst because some properties sold for far less than what they were initially appraised.
All this being said, I have about $18K in miscellaneous debt and I would like to take out a home equity loan. I am going to try to take out $35K to consolidate the aforementioned debt and also furnish the new house after we close. Does anyone see a problem with me doing this? Also, how soon after closing on the house would I be able to do this?
Thanks and regards
|
Mon Jan 25, 2010 5:47 pm |
|
|
oldguy
Senior Member
Cash: $ 309.10
Posts: 1480
Joined: 21 May 2006
Location: arizona
|
quote:
and also furnish the new house after we close
LOL - what happened to the furniture in your old house?
You are following the exact recipe that caused the real estate bubble - ie, using your house for an ATM and spending the equity on fast-depreciating toys.
But I doubt that you'll be able to do this, the appraisal will be close to your purchase price, way less than last year's prices.
|
|
Mon Jan 25, 2010 8:52 pm |
|
|
autigr14
New Poster
Cash: $ 0.45
Posts: 2
Joined: 24 Jan 2010
Location: Alabama
|
|
|
|
quote:
Originally posted by oldguy
quote:
and also furnish the new house after we close
LOL - what happened to the furniture in your old house?
You are following the exact recipe that caused the real estate bubble - ie, using your house for an ATM and spending the equity on fast-depreciating toys.
But I doubt that you'll be able to do this, the appraisal will be close to your purchase price, way less than last year's prices.
Our washer and dryer are crap. And we'll need a refrigerator, other than that, we won't need anything. Mainly the loan will be used to consolidate credit card debt, so how is that a fast depreciating toy? Especially if the credit card's interest rate is higher than the loan's? And people using the equity in their home to pay off fast depreciating toys might have been part of the real estate bubble, but the precedent of that was people bought houses they couldn't afford in the first place. And not to be rude, but I'm an engineer, not a burger builder, so I don't think I'll have that problem.
|
|
Tue Jan 26, 2010 2:39 pm |
|
|
coaster
Senior Advisor
Cash: $ 1357.80
Posts: 6686
Joined: 11 Oct 2005
Location: Wisconsin
|
quote:
Originally posted by autigr14
.... people bought houses they couldn't afford in the first place....
I see signs that may be starting to happen again.
~Tim~
Eye Candy : Why Whimsy
|
|
Tue Jan 26, 2010 4:03 pm |
|
|
littleroc02us
Moderator
Cash: $ 204.95
Posts: 1013
Joined: 09 Feb 2009
|
I wouldn't suggest moving until you have your debt paid for. Selling and moving into a bigger house with a bigger payment and still carrying the debt is a bad idea. As for a home equity loan to just move your debt around is also a bad idea. I see a problem a brewing if you do this. Just a warning in my opinion.
Romans 13:8 “Owe no man any thing, but to love one another: for he that loveth another hath fulfilled the law.”
|
|
Tue Jan 26, 2010 4:57 pm |
|
|
oldguy
Senior Member
Cash: $ 309.10
Posts: 1480
Joined: 21 May 2006
Location: arizona
|
quote:
And people using the equity in their home to pay off fast depreciating toys might have been part of the real estate bubble, but the precedent of that was people bought houses they couldn't afford in the first place
The Rule of 72 - your money doubles in rate X years = 72. Ie, @ 12% it doubles in 6 yrs. That is based on e^0.72 = 2.
That same rule works on revolving consumer debt - if you pay 12% on $18,000 your lender gets $36,000. So you need to get on the righr side of that equation.
Eg, $10,000/yr placed a 12%/yr = $2.7M in 30 yrs. If you make that a priority, a family discipline, never waiver, then you can enjoy spending the rest of our income stream on your family.
BTW, appliances are among the worst depreciating items that a family owns - late model are probably the absolute worst.
|
|
Tue Jan 26, 2010 6:59 pm |
|
|
coaster
Senior Advisor
Cash: $ 1357.80
Posts: 6686
Joined: 11 Oct 2005
Location: Wisconsin
|
quote:
Originally posted by oldguy
BTW, appliances are among the worst depreciating items that a family owns - late model are probably the absolute worst.
Consumer electronics have got to be the worst; they depreciate while they're sitting in the store. I bought a 42 in LCD HDTV before Christmas. A week later, after Christmas, it was $200 less.
~Tim~
Eye Candy : Why Whimsy
|
|
Tue Jan 26, 2010 8:06 pm |
|
|
oldguy
Senior Member
Cash: $ 309.10
Posts: 1480
Joined: 21 May 2006
Location: arizona
|
Whoops - I meant "late-model cars".
|
|
Tue Jan 26, 2010 8:21 pm |
|
|
splinter7
Member
Cash: $ 3.60
Posts: 18
Joined: 12 Jan 2010
Location: U.S.
|
I don't see how you could get anything for a heloc more than what the down payment was. House prices aren't moving upward that fast amywhere I know.
If you buy for 1$, then the value is 1$. the appraisal will likely be about the same as the price you negotiated. They work backwards, unless there is some great disparity between what you think its worth and what the bank/appraiser thinks. usually the difference is that you think its worth more than the bank does. In that case, they won't give you more than what the house appraises.
btw, if the builder paid a million dollars to build the house, it doesn't mean the house is worth a million, it just means the builder messed up.
|
|
Tue Jan 26, 2010 9:33 pm |
|
|
Elmira Nancy
Preferred Member
Cash: $ 26.90
Posts: 136
Joined: 01 Dec 2009
|
Home equity loans make a great option for refinancing, but there are some important factors that should be taken into consideration, before taking any decision. Generally speaking, there are 2 types of lenders offering home equity loans. One that offer you loan with low cost refinance & other which give 'no cost' refinance home equity loans to the borrower. When ready to take the crucial decision, have thorough research about your lender and the offer you are getting. Take extra care to check, you are not being ask to pay higher rate of interest or additional fee. A rare edge that home equity loans get against other loans is that you don't need to pay cash by closing costs on your loans.
TradeStation Review
|
|
Tue Mar 02, 2010 5:21 am |
|
|
littleroc02us
Moderator
Cash: $ 204.95
Posts: 1013
Joined: 09 Feb 2009
|
One question I forgot to ask. What happens if the value doesn't go up and you have all of this debt??????
Romans 13:8 “Owe no man any thing, but to love one another: for he that loveth another hath fulfilled the law.”
|
|
Tue Mar 02, 2010 10:24 pm |
|
|
Creditnet_com
Full Member
Cash: $ 10.65
Posts: 53
Joined: 22 Feb 2010
Location: Seattle, Washington
|
I can't imagine the bank being too quick to offer you a HELOC on your new home. Especially with the Credit CARD Act in effect, banks are trying to figure out how to make money. This may mean we'll see an even tighter grip on lending than we've seen the past year, at least until the smoke has cleared and banks are able to more accurately forecast their earnings and losses.
Creditnet.com: Credit FAQs, blog and more
0% interest credit cards
Credit cards for bad credit
|
|
Wed Mar 03, 2010 7:24 am |
|
|
tanmaysnv
Contributing Member
Cash: $ 9.15
Posts: 44
Joined: 06 Oct 2009
Location: Indore
|
HI
home equity loan allows you as a homeowner to get a loan by using the equity in your home as collateral. The equity consists of whatever funds you have invested in your property in order to own it or improve it.
Thanks !!!!
Investment pool
|
|
Wed May 19, 2010 7:09 am |
|
|
|
