Question on refinancing a HEL?

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optimusprime_IHB

optimusprime_IHB

New member
Yesterday, I was speaking with an uncle of mine who I haven't seen in a while....long story short, he lives in HB...good area. He brought up an interesting question and I never even thought of it...what if you took out an HEL your home and wanted to refinance it to a lower rate.





Some background info:


- He bought in the early 90's for probably $300k...home is worth close to $1mm in his area.


- Home is fully paid off.


- He took out a HEL for about $300k at 6.25% or so about 6 months ago.





He asked me about rates and I said I wouldn't be surprised to see it drop 100 bps. So a HEL could be found for 5.25% to 5.50%.





Anyways, can anyone answer my question:





Would my uncle need to pay back all $300k in his HEL in order to refinance that $300k....with another lender? Or is there another process?





Thanks for answering.








**** Apologize for the confusion earlier, I mentioned HELOC when it was an HEL****
 
<p>That would be a 3rd mtg. Not illegal, but so dangerous I can't believe that you would get one from anybody. Why wouldn't he want to pay off the whole thing.</p>
 
No he's not taking a 3rd mortgage. Maybe I should rephrase my question.





How would he go about refinancing his HELOC from 6.25% to a lower one..say 5.25% if it happens this summer or fall.





He's not taking another $300k out, he wants to refi the balance (i.e. $280k) down to 5.25% from 6.25%
 
Just go apply somewhere that they're still giving HELOCs. If they are. They still are here on the other side of the continent, but only if you still have 20% of equity left, after adding the first and the 2nd.
 
Gig is only up when you lose the equity and your over 80% DTI Ratio. He looks good but most HELOC's are still high so how is he getting 5.25??
 
Your uncle should just refinance his HELOC (adj interest rate) with a fixed home equity loan, that way if interest rates go up, his rate is fixed.



www.penfed.org has 20 yr fixed at 5.99%, but he needs good FICO and DTI ratios.
 
So it doesn't matter if he took his 1st HELOC at "XYZ Financial" and then refi at another place like "ABC Financial"? Do they just transfer the title of whoever underwrote his HELOC?





As for the 5.25%...that's just assuming rates get cut drastically over the next 6 months that HELOC rates will drop to 5.25-5.5%.





Thanks for the answers so far.
 
<p>The one lender will satisfy the loan upon receiving the money from the second lender.


Then that loan will be history.</p>

<p>I agree with the poster who says that your uncle should just refi the whole thing into one fixed rate 30 year loan. Or, if he can afford it, an even lower rate 15 year loan.</p>
 
LawyerLiz.... I guess I'm confusing some.





Maybe I'm confused myself. My uncle's home is paid off. He did mention it's a 15 yr fixed he took out like 6 months ago.. 6.25% or so.





So I guess it's a 15 yr fixed??
 
<p>If you uncle's house has a new mtg, it is no longer paid off. If it was paid off. Was it?</p>

<p>Please go back to your uncle and get the facts:</p>

<p>One mtg or 2. What's the rate? Fixed or adjustible? What's the term?</p>

<p>We can't help you if you don't know the facts.</p>

<p> </p>
 
<p>I give up. </p>

<p>A HELOC is (usually) a second mortgage. Apparently this HELOC is a first mortgage. Since he has a mtg, IT IS NOT PAID OFF ANYMORE..</p>
 
Lawyerliz



I think what Optimusprime is saying flows like this:

1) had a 1st mortgage and it was paid off two to three yrs ago

2) just about 6 months was approved for a HELOC at 6.25% for 300K

3) now that rates are going down, I am not sure about this, can he refinance his HELOC to the lower rate...and if so how?
 
Thanks Mino.....





Anyways, MY BAD....it's not a HELOC..since that's a line of credit etc.





He got a "HEL" ..home equity loan for $300k since he got the check over the summer and mentioned he was buying short term CD's in the meantime while he is looking to purchase another property next yr.





Sorry for the confusion.
 
LawyerLiz...not to be rude but really don't reply to this thread anymore.





BTW...he's buying another property YES!! and he'll probably do it sometime NEXT YEAR!
 
Optimusprime - not to be rude, but you really should get your facts straight before asking for any input. Your whole thread has wasted everyone's time since you have no idea what the facts are or what the hell it is you are asking. ITS NOT THAT COMPLICATED!!!
 
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