Financial gurus inside please??

[tn94z]

Okay, I have my house for sale at the moment because I want to build a smaller house with more land. I have a lot of equity built up in the house. I also have a lot of debt other than the house that gives me a very close debt to income ratio. I have a friend that works at a bank that can hook me up with a home equity loan. Now my original plan was after selling the house, using some of my profit to pay off everything I owe. Well, there are many things I could do to the house now to really help it sell more quickly but I just don't have the cash at the moment.

Here is my question coupled with an idea that I had. What would be the down side to going ahead and getting the home equity loan and using it to pay off the other debt that I currently have? Then once the house sells, both the house and the equity loan will be paid off and I will be at the same place as I would be had the house sold (but more than likely much more quickly) and I then used the profit to pay off my bills? The reason I am thinking of doing this is because if I get the home equity loan now and pay the bills off, then that would free up the cash I need to put into the house to make it sell more quickly. Is this a stupid idea, good idea, etc...?

[daved150]

Re: Financial gurus inside please??

hows realestate selling in your area? how about homes in the price range your is gonna be at? are they selling quick? for good $? are you gonna be able to pull an equity loan, get over and above that amount?

[Stout1]

Re: Financial gurus inside please??

Typically second mortgages are bad....thats why people are in the mess we are in today. They keep remortgaging, remortgaging and remortgaging their homes.

What guarantee do you have that the house will sell once you do this? How much money we talking here? I used to do home refinances....

[tn94z]

Re: Financial gurus inside please??

hows realestate selling in your area? how about homes in the price range your is gonna be at? are they selling quick? for good $? are you gonna be able to pull an equity loan, get over and above that amount?

Actually I the market is getting better here. The homes in my price range are selling quite a bit more slowly. My house is priced very competitively with other like houses and I have the room to go quite a bit lower if need be. I should be able to sell the house for more than the house plus what the home equity loan would be....if I am understanding your last question correctly. I can only get a max of 80-90% of the equity in the house (which I would not get that much) and that will put me under what the house actually appraises for...I am using the land tax appraisal and not an actual home appraisal which I have been told is higher.

[tn94z]

Re: Financial gurus inside please??

Typically second mortgages are bad....thats why people are in the mess we are in today. They keep remortgaging, remortgaging and remortgaging their homes.

What guarantee do you have that the house will sell once you do this? How much money we talking here? I used to do home refinances....

I don't have a guarantee that the house will sell. I will spit the numbers out since you guys are not looking at buying the house. I owe 149k on the house. It is on the market for 265k....big house in very nice neighborhood. I am looking to get an equity loan of like 40k.

[daved150]

Re: Financial gurus inside please??

that would put you at a payoff of 189k....i dont know the area, but i know my area, IF a house sells, it's under 200k. i dont care if it appraises for 400k...thay aint moving over 200. i dont know that i'd put the 40k in it bro...i think your in an excellent position as you are! is it to fix something or just curb appeal? whats the 40g's for...structual or cosmetic?

[tn94z]

Re: Financial gurus inside please??

that would put you at a payoff of 189k....i dont know the area, but i know my area, IF a house sells, it's under 200k. i dont care if it appraises for 400k...thay aint moving over 200. i dont know that i'd put the 40k in it bro...i think your in an excellent position as you are! is it to fix something or just curb appeal? whats the 40g's for...structual or cosmetic?

No, no...I don't want to put the 40k completely into the house. The 40k will pay off everything I owe now. Then with that stuff paid off, it will free up extra money that I can use to fix some issues and curb appeal. I am not looking to put 40k into the house per say....I was going to pay off credit cards, misc loans, etc...Then because I won't have the monthly payments from those, I will have the extra cash to work on the house.

[jamescb77]

Re: Financial gurus inside please??

i wouldn't do it bro. just wait until the house sells. like everyone has said there is no promise that the house will sell once you do these upgrades. I have a rule of thumb-never take out a loan to pay a loan(or credit card). it's a bad practice and i know you have equity in your house but it still doesn't make it ok. Also i have always heard and learned you should never borrow against equity that you have built in your home. My suggestion wait it out till the house sells.

[tn94z]

Re: Financial gurus inside please??

All good advice. I'll weigh out the options.

[jamescb77]

Re: Financial gurus inside please??

what are you wanting to do to the house that is going to "help" it sell faster

[tn94z]

Re: Financial gurus inside please??

Well, there are some cosmetic things like cracks in the brick, need some steps layed on the patio, concrete sealed. Landscaping, etc...curb appeal. There are some pops and squeaks in my floors. Heating and air upstairs needs to be done so I can add that square footage. Some repainting...which isn't much. Just things like that.

[daved150]

Re: Financial gurus inside please??

i dont know...i'd maybe to some curb stuff on the cheap, but right now i think i'd hold tight on the loans

[deepsouth]

Re: Financial gurus inside please??

Well my mother owns her own realty Co. and I used to do home mortgages on the side so I will say this and I'm just going by the market here. As you know the pool of buyers gets smaller and smaller the higher the price. 6 months ago everything on the market here was selling that had land attached no matter the price, but in the last 2-3 months- the onlyy thing moving is 100K and less. To make your house sell- you need things like freash paint- new carpet- landscaping and anything you can add to get the womans attention- granite countertops/crown molding and things like that. Sell the wife- sell the house. To get the man- we use T-111 siding sheets cut in half(4'x4:') and go around the bottom 4' of the garage and topped with chiar rail -painted- that will sell him on a super garage. If you don't have the funds to do the upgrades ,all I can say is don't borrow more than you absolutely need cuase you'll just spend it. Get your money-do your upgrades and sell your house. Good rule of thumb- if you can't make $2.00 for every $1.00 you spend- don't spend it- just take a little off the price and let the new buyer do it.

[Stout1]

Re: Financial gurus inside please??

Also do you know that the payment on a HELOC (Home Equity Line of Credit) is typically a 10 year interest only balloon. At least at the company I worked at....here is how it would be structured. Say you borrow $40,000 then you only pay interest, no principal, on that for 10 years so its a real low payment and gets a lot of people roped in cuz it's such a low payment but after ten years you still owe $40,000. Not a good loan unless you know this ahead of time and you are paying MORE than what you are being billed but who does that these days?

Why not just drop the price $10,000 and not **** with gettign another loan?

[Stout1]

Re: Financial gurus inside please??

Actually I the market is getting better here. The homes in my price range are selling quite a bit more slowly. My house is priced very competitively with other like houses and I have the room to go quite a bit lower if need be. I should be able to sell the house for more than the house plus what the home equity loan would be....if I am understanding your last question correctly. I can only get a max of 80-90% of the equity in the house (which I would not get that much) and that will put me under what the house actually appraises for...I am using the land tax appraisal and not an actual home appraisal which I have been told is higher.

The tax appraised value and the appraisal done by a licensend insured appraiser are not the same thing. From my knowledge in the business is you have to get a FULL appraisal from an appraiser and it can be no older than sixty days from the date your loan closes so you can't use the "tax value" of your home....many people think this but it doesn't work that way....you'll have to get it appraised again especially if you already had it appraised and it's by an appraiser that isn't on an approved list with a certain bank. I've had people just appraise their house with a friend of the family but he isn't on my banks list so they are shit out of luck and $400 so they had to pay it again.