About Ron Bauer Expertise Whether you have great credit or think you are the most credit challenged person on the planet I can help you with mortgage related questions about purchasing a home, investment property, refinancing, or doing some debt consolidation. I also specialize in helping those needing credit repair or creative financing when purchasing a home. Additionally I work with many second home and investment property buyers in a variety of States. My clientele is mainly west coast (California, Colorado, Nevada, Utah, Arizona...), but I lend in all 50 States and will do my best to answer any question you may have on any conventional, FHA or VA loans...
Experience Experience:
Sr. Residential Mortgage Lender of a National Bank specializing in "residential" mortgages including FHA/VA loans and investment property strategies. We process, underwrite, and fund in house for most of the big named companies and then some...
I am currently looking to purchase a NJ Shore Condo for both summer rental income as well as personal use. I am looking to spend up to $150K on a small condo (I found this can easily be had in Wildwood NJ). My question is how to finance it. My primary house is in PA. I currently have my primary condo mortgage at 4.75% with 3 full years remaining at the fixed rate (it's a 7/1 ARM). I owe about $124K and the same units as mine recently sold between $220-$225K. Since I have little in liquid savings should I open a HELOC to fund a down payment or do a re-fi on my house with a cash out option? I plan on living in my primary residence for probably another 4-5 years.
Thank you,
Anthony
Answer Anthony,
Thank you for contacting me with your question. It sounds like you are on the right track.
If you were a client of mine I would gather all the facts & existing payments then do a few side by side comparisons for you to consider and see the numbers.
1) I would look at your existing 1st mortgage payment + new 2nd mortgage payment (30 yr fixed rate $40K @ $325/mo. estimate)
3) Refinance cash-out 30 YR fixed rate (Est. 75% loan to value - 6.00% = $1012/mo.)
By looking at a side by side comparison I could then better present what might work best for you. The above is just an example of what I would compare and not a quote. I need more information to provide more accurate numbers...
I would suggest looking rather into a fixed rate second mortgage then a HELOC. Take it the PRIME rate is lower then it has been, but many fixed rate 2nd mortgages are low too.
To avoid mortgage insurance I would consider taking 20% (of the 2nd home purchase price) + 6 months of the new house payments to put in reserves. In any case the combined new loan to value on your existing home should be 80% or less. This will give you a down payment + comfort zone. Typically you would want this completed with cash in hand prior to starting the new purchase transaction.
Down the line if prevailing rates improve you can always refinance your primary residence into 1 fixed rate loan, which you would want to do before it goes adjustable.
If you like I can help you with all your options as I do lend in all 50 States.
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This topic answers questions related to purchasing a home, owning a home, home ownership, mortgage education, mortgage applications, and mortgage needs whether buying a first home or refinancing a current loan. Issues related to home ownership, home equity, mortgage education, refinacing options, home improvment finacing, first time home loans, home equity loans, vactation home loans, and mortgages for investment homes are dealt with here also. Though not the primary focus of this topic, Home Equity Lines of Credits (HELOCS), reverse mortgages, and calculating home equity may also be asked. If you do not see your home mortgae, home finacing, or home equity question answered in this area then please ask a question here
