50% Equity
Hi I'm new so maybe this is a stupid question but....I have a relative that I'm worried about. I don't want him to lose money and he's wanting to refinance his house that has 50% equity to buy another investment. does this sound like a good deal for him? 
Why not take out a home equity loan or open a HELOC? - rates are usually better.
Is he generaly smart guy? I think is better to refinince the house and his hands on the money because you never know. Eaither property or when you get tired you can go on vacation. it's good tyo have money and make investments. Right guys?
I think that your best bet is a HELOC. The money is there for you to use when and if you need it and you only pay interest on the money that you use. The interest rate is lower also.
Worf has it correct HELOC. There you sit with a credit and you draw against it as you need it and the interest rate, if you watch it is just about the best.
Ok here comes the voice from the back of the Chariot. "Beware the Ides of March"
Remember, the norm mortgage figure until the end of WWII was about 50%. That is just about what you could borrow and in those days you stayed below 20% of your monthly steady income, to service your mortgage payment.
I know it sounds old fashioned, you see all these real estate prices jumping up and up and you think that is the true value. NOT, it is an aberration. Watch your income curve and you will see the property price swinging way over the top. So with great care. If he is snug, then borrow with great care and watch the payments he will have to make to carry the debt. Be sure all the investments are truly positive as to the return on the investment.
I sound like an old maid yelling out "Go slow, go slow."
Cheers Lucius
I just set up a HELOC and it is almost "free money" 3.5%, amazing.
I'm overwhelmed by the positive response! Thank each and every one of you. I'll talk to him and look into the HELOC! Thanks again!
Cynthia
I spoke to a rep from Chase and they have a HELOC program that you pay no closing cost at all! You have to have good credit though. Just a thought.
oh! Tanya thank you....Chase....I'll look into it.
thanks again
Cynthia
Cynthia,
A new loan program for HELOCS came out 03/01/2004 which allows the heloc to go up as the equity in the house goes up. I would suggest anyone thinking about a heloc asking the Rep if this is available. All Helocs are based on Prime and this new program will open another door to the REI
Lori
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