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My house is paid off. How can I mortgage it without taking an equity loan?

Question by F C: My house is paid off. How can I mortgage it without taking an equity loan?
My brother helped me buying the house off. Now I need to finance the house to pay him back. Will this be considered a new mortgage, a refinancing or an equity loan (since they have different interest rates…)
thanks!

Best answer:

Answer by kingaroo2u
It will be an equity loan.

Add your own answer in the comments!

 
7 Comments for this entry
tony
August 4, 2011
18:11

Equity is the percentage of the property of which you own. Since the house is paid in full you have a 100% equity position. In your case borrowing money against your house with a mortgage is using your equity. A mortgage & equity loan in this case is the same as car & automobile. Contact a mortgage company and tell them that you want a 1st lien mortgage on your house, which is free and clear. Be wise and take a fixed rate loan with payments that you can afford. Also insure that the loan does not have a prepayment penalty. The best way to find rates and payments on your home is through bankrate.com. If you have a mobile home, farm or mixed use property, it would be best to contact the original mortgage company.

Reply
Cynthia A
August 4, 2011
19:01

Contact a lender not a broker if your credit is good a lender is the best way they will not charge origination fee, check with your bank or credit union to see what kind of offers are out there. If you get a line of credit or home equity it usually going to be a rate that fluctuates if the prime goes up so does the line of credit rate. And prime just went up another quarter bring it to 8.250%. If you do a cash out refinance you can payoff you family member and the interest can be written off at the end of the year when you do your taxes.

Hope this helps.

Reply
piggrumpy@verizon.net
August 4, 2011
19:52

If its paid off just go with the equity loan.

Reply
Malinda S
August 4, 2011
20:05

Don’t do it because the rates is going 2 be high.See can u pay him a little at a time write up a contract and both u sign saying how much u gonna pay him back instead.

Reply
jean
August 4, 2011
20:14

if the house is already pay off, you have to take an equity loan, mortgage and refinance are for money owe for house. maybe you can take a personal loan if you don’t want equity loan, or don’t take a loan at all, just pay your brother each month with a portion of your paycheck.

Reply
Tom S
August 4, 2011
20:54

Get a new mortgage. The rate will be better than a Home Equity Line of Credit or a straight fixed “2nd”.

If you are in CA, I can help. Tom4Loans@sbcglobal.net

Reply
frymail2005
August 4, 2011
21:04

Definitly go with a fixed rate first mortgage..

As the other responses tell you, you will simply borrowing against your property that you own free and clear. It will be considered just a new first mortgage (refinance).

You definitely do not want a Home Equity Line of Credit..even though every LARGE bank in america tries to advertise and SELL these loans, they are a bad move for any borrower. Not only are they bad for your credit, you will have a much higher interest rate.. Banks try to SELL them to people because they make much more money on a equity line of credit..

I would also advise that you work with a nationwide lender that has a portfolio of investors. The reason i say that is becasue if a loan consultant can shop your loan for you among their many investors, you will get the best possible loan program for yourself. What i mean by that is you will get lower fee’s, lower rates, and faster service…

My name is Jason Fry, and I am a loan officer with Providential Bancorp, a nationwide mortgage lender. I’d be happy to assist you in a refinance, or at least be able to let you know exactly what YOU QUALIFY FOR. You can then make a more informed, and educated decision whether it would be the right move for you.

Feel free to give me a call at 312-264-6448, or
you can email me at Jasonf@providential.com.

Thank You,

Jason Fry
Providential Bancorp

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