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June 9, 2009
Good sources for cash-out refi?
We own a 4-story brownstone in Park Slope outright (been here a long time) and are planning whole-house reno to start in next few months. We will be seeking a $300,000 cash-out first mortgage.
Rates have just jumped and hot debate about whether they're going up up up right now (The What) or likely to dip briefly before up up up (Adam Dahill, others).
Does anyone have good sources for mortgages at pre-increase rate (i.e., at rates posted two weeks ago) for extremely good credit rating and bldg with tons of equity? LendingTree, Amerisave, Quicken offer appearance of lower rates, but when you factor in their "lending discount" (another word for points) there's no difference. Are there any NY institutions that understand what a brownstone neighborhood is and might give a rate "discount" (i.e., pre-hike)for high credit and equity?
Or should I just bite the bullet and lock in to something right now before they jack things up more on the basis of so-called recovery (for Wall Street)?
Lending sources, predictions appreciated.
Comments
Getting a loan at the rates from two weeks ago sounds optimistic. If you don't really need 30 years to pay off the the loan & don't need 300k all at once, it might be worth considering a heloc which will probably run prime + a spread of 1.5% or so (hsbc.com). With prime at 3.25 it's pretty cheap money in the short run. Presumably you could pay your reno costs over time as work is done and borrow as needed. I've been told that once you max out your heloc it's fairly easy to convert to a fixed home equity loan at a rate that tends to be less than what you'd get if you get on the home equity loan vs. line of credit in the first place. You take the risk of interest rate increasing, but you have the benefit of the lender paying the closing costs if you keep the line (or HE loan) open for 3 years.
Posted by: Bklnite at June 9, 2009 11:17 AM
Reaction to Bklnite's advice:
We have a HELOC with Chase at Prime + 0.5% from a couple of years ago. Their website allows you to model converting it to a fixed loan. The fixed loan rate jumped up to 11%. I called my contact at chase to see if that could really be correct, she confirmed that it was. This was maybe 4 months ago. So I would advise to NOT count on converting to a fixed loan at least with Chase...
Posted by: phripley at June 9, 2009 11:30 AM
From my own experience I don't think it is possible to lock at a rate from two weeks ago. The most I have seen is to lock at the rate from the day before.
Posted by: lostintranslation at June 9, 2009 11:44 AM
Unfortunatly you can not get a rate from two weeks ago or everyone would be doing it. We are a tad better today from yesterday's close but still about a full percentage point higher than 2 weeks ago.
It's very frustrating that they moved higher so much so quickly but be ready to lock if they move lower again as it will only be a small window of opportunity before they shoot back up again.
Posted by: Adam Dahill at June 9, 2009 12:20 PM
Thanks, all. I had drawn the same conclusion about HELOCs as phripley -- I could find myself with an interest rate as high as 18%! I guess there's no longer the "personal touch" in lending (i.e., good customer = better rate vs. poor risk = higher rate). I think I'll follow Adam Dahill's advice -- if the rate continues to go up immediately, it is going to spell disaster for the 40 M households who are underwater -- and the economy in the long term. But short term rules!
Posted by: Silvermax at June 9, 2009 1:34 PM
adam dahill knows his shit re loans...listen to him
Posted by: eman1234 at June 9, 2009 7:30 PM
I may be able to help- email me at esegal(at)primerica.com. No guarantees, but I have some contacts...
Posted by: SaveNowForCollege at June 11, 2009 1:23 PM
I refinanced recently for the purpose of a cashout for home improvement(roughly 100k)and I dealt with an organization by the name of The Equal Opportunity Home Council ( www.eohc.us). I received a notice in the mail and although I was skeptical to deal with them, it ended being a great financial move. When you have a moment, contact Scott at 718-539-2341. He handled my loan and referred a contractor that gave me a great deal on the work!!! Very satisfied!
Posted by: Phil at June 11, 2009 2:55 PM
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