Cash-Out Refi of Primary Mortgage w/o Paying Off Equity Line?
I would welcome feedback from the knowledgeable members of this forum if the following refinancing scenario is possible, with an excellent credit score. I will be contacting lenders soon but welcome input here. I would like to do a cash-out refinance of my primary mortgage without paying off a low-rate equity line. Is that possible?…
I would welcome feedback from the knowledgeable members of this forum if the following refinancing scenario is possible, with an excellent credit score.
I will be contacting lenders soon but welcome input here.
I would like to do a cash-out refinance of my primary mortgage without paying off a low-rate equity line.
Is that possible?
Combining the amount of the primary mortgage and the secondary mortgage (locked-in equity line), I would not be borrowing more than 80% of my property’s value.
I want to do a cash-out refinance of the primary mortgage to pay off higher-rate credit card debt and a higher-rate investment property mortgage, and the bring down the rate on the primary mortgage.
The amount that I am seeking in the cash-out refinancing would allow me to take out a conventional loan – not a jumbo.
If I must also pay-off the equity line in this refinance, the amount of the new loan would require me to take out a jumbo loan – at a higher rate.
(In either case I will likely seek only a 30-year fixed loan).
So I would welcome feedback here if a cash-out refinance of a primary mortgage is possible without paying off the equity line on the property.
Thanks in advance for your replies.
Hi,
What you are trying to do is called subodinating your 2nd lien. This is totally up to your 2nd lien holder. It can def. be done. The rate will not be affected on your refinance. Its not as common anymore because 2nd lien holders have been burnt so bad by defaulting mortgages.
Email me if you have any questions or need help refinancing
Equity Source Home Loans
vsarrica@equitysource.com
Good Luck
Although the CTV is a factor, your existing lender has the final say. Many lenders will only subordinate to a cash out refinance that has a CLTV of 50-65%.
Also- you can assign your loan from your lender to ANY OTHER lender as long as your bank does the assignemnt process. It does not have to stay with the existing lender to do a CEMA and save the mortgage tax.
Vanessa Thatcher
ATLANTIC HOME CAPITAL
Tel: 631-687-3510 x106
EFax: 631-918-5222
Cell: 631-672-4113
Just saw this, so adding my experience in case it helps.
I refi’ed w/ cash out, conforming (<=417k), in December 09. Contrary to what CGDad said, I don’t think rate needs to be be higher than for a straight non-cash out refi. I got 5% which was the best rate they would have given regardless of cash-out or not (though not as good as now) and I didn’t pay a point. As raphael9 said, you have to have combined LTV below the threshold, and have to pay for heloc subordination ($100 for me).
In my case, with mortgage and heloc all with Citi, the mortgage department was ok w/ LTV up to 80% so I thought I could keep the full amount of the line of credit, but when I got close to closing I found out that the heloc department had a max of 65% LTV, so I had to agree to reduce the line accordingly. My heloc is prime -.25%, and they told me at the time they were doing new helocs at prime + 3%.
You can do it, as long as the CLTV is below the threshold set by the bank making you the new loan.
Are the old first mortgage and the heloc with the same bank? You will probably want to refi the 1st mortgage with the same lender so as not have to pay mortgage tax on the full amount. As long as the bank assigns the loan to themselves, usually for a fee like ~300-400, then you just pay mortgage tax on the new money.
Then the heloc has to be re-subordinated to the new loan, and the holder of the heloc has to be willing to do this, again usually for a fee. Some banks balk at this and just won’t do it. If both loans are held by the same bank, it helps.
Yes, it is possible – I am in the middle of a similar refi. Rate will be higher than for a straight non-cash out refi, and you may have to pay a point. Where you may get stuck is on 80% combined loan-to-value. The bank I am working with will do a cash-out only with a 65% CLTV. You also have to have best credit, solid income, plenty of liquidity etc. I am keeping my equity line open, but have to reduce it in size in order to fit under the 65% CLTV.
hmm- I think it depends on different factors the bank will look at:
#1 – do you have a sizable salary/income
#2 – do you get any income other than a salary
#3 – credit history/score
#4 how long you have had both loans on the house
I tried doing this back in 2008/2009 on my 2 family in park slope where the house was appraised at 50% more than what I owed so I had enough equity in the house to do a cash out refi- but at that time my bank (Astoria Federal) was very hesitant to grant me a new loan with more cash out, however you may be in a different situation and I think banks have eased up a bit in terms of refinance.
Good luck!