Jamie B asked:
My mother used her equity line to buy a house for my husband and I. The house is completely in our names only and we do not have any loans or mortgages on it. I would like to take out a mortgage on the house now to pay my mother back. If we own the house but do not have a mortgage do we get a refinance loan? Can you get a regular mortgage on a house you already own? I would hate to get an equity loan since the rates are so high and am scared to do get a variable rate equity line. What kind of a mortgage/ loan can i get? I am looking for the lowest interest rate possible. Also, can you take out a mortgage and equity line at the same time? Id like to take the mortgage for the money i owe my mother and also take out an equity line for emergencies. Thanks!
Kathryn
My mother used her equity line to buy a house for my husband and I. The house is completely in our names only and we do not have any loans or mortgages on it. I would like to take out a mortgage on the house now to pay my mother back. If we own the house but do not have a mortgage do we get a refinance loan? Can you get a regular mortgage on a house you already own? I would hate to get an equity loan since the rates are so high and am scared to do get a variable rate equity line. What kind of a mortgage/ loan can i get? I am looking for the lowest interest rate possible. Also, can you take out a mortgage and equity line at the same time? Id like to take the mortgage for the money i owe my mother and also take out an equity line for emergencies. Thanks!
Kathryn
Regina
Your mother did a nice thing.
Why don’t you just pay her back slowly.
She is probably taking a little tax deduction of that HELOC she made for you.
Tell her how you feel. Tell her you would like to pay her back on a set amount of time, and draw up a contract.
Financing a home is costly. Ours was 5 grand in closing costs alone.
I don’t think you can take out a HELOC if you don’t have a mortgage – I’m pretty sure.
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Comment by Judy — February 21, 2010 @ 3:17 am
Maurice
Not sure other answer is correct. Your mother can deduct interest on the loan IF it’s secured by real estate/her home. A home equity loan CAN be the only mortgage you have on your property. It’s just what it says; a loan against the equity in your house. People forget that most home equity loans are “second” mortgages against a house however, they can be a first. A mortgage is a mortgage.
Yes, refinancing would be a great way to pay your mother back provided you and your husband have the income to repay the mortgage. My assumption is that you would have a great LTV (loan to value) on your property as you have NO mortgages against it. Since you say you have two purposes for your loan, take out ONE mortgage because second mortgages are usually much higher rates. Just borrow enough for you to have an emergency fund and put those funds in a money market or somewhere else that pays a little interest and is easily accessible. Not pushing for them, but take a look at americanequity.com If they are located in your state, they specialize in these sort of loans. But check with your bank or credit union.
Based upon the limited information you have, I still think that you will be able to do what you want. Technically, you could take out a first mortgage to pay your mother back and a second for your home equity line but the rate would be higher. Another possibility would be to take out a home equity line of credit and only draw down enough to pay your mother, leaving the remaining balance “undrawn” so that no interest accrues. That would give you the emergency fund you want. But make sure you examine all options.
Comment by MJ — February 24, 2010 @ 12:27 pm