I'm going through a divorce and I want to keep the house if possible. I thought about refinancing the house and taking out an additional 25k to pay off my wife. The lender said I could only take out 80% of the loan which come out to 7-9k. Would it be feasible to refinance 177k and then turn around and take a home equity loan for 25k? I have around 50k equity.

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    I doubt you can get a home equity loan with more than 80% LTV. It looks like the 7-9K you got is pretty generous. – littleadv Feb 13 '13 at 21:12

A traditional bank will give you a maximum loan-to-value of 80%. There are ways around this:

  • Have the bank appraise your property and review the current value of the house. Depending on your situation, this can significantly raise the value of your house and might get you the loan you need.

  • If your wife is agreeable, work out a payment schedule with an up-front lump sum and monthly payments at an agreed upon interest rate thereafter. Have your lawyer draw up the paperwork and have hers review it. Including penalties for non-payment will make her feel more confident you won't reneg on the deal.

  • Visit a mortgage broker and tell them you're looking for a hard-money lender to take on a second mortgage. Since this is a private loan, you can go over the 80% LTV rate your bank offers. Also note that the interest rate and setup charges will be significantly higher than the other two options because the hard-money lender knows you're stuck.

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