44
votes
How to split home equity fairly where contributions differed?
IMHO, the word partner is relevant and changes the answer. If you had used the word friend instead, I feel that the most fair equity breakdown would be based on the contribution amounts. But in this ...
- 47.3k
38
votes
How to split home equity fairly where contributions differed?
There is no "standard practice". The terms of ownership should have been put in writing when you bought the house.
Without anything in writing, the equity should be split in whatever manner you both ...
- 140k
25
votes
Why are interest rates for home equity loans higher than for a mortgage?
Home equity loans are generally subordinate liens. Mortgages are generally first position liens. In the event of a short sale or foreclosure, the first position lien gets paid off first, and then ...
- 548
18
votes
Accepted
Does home equity grow with the investment put into the house?
The bank I work with would be more inclined to expand an existing HELOC rather than write a new one. I think that would be your best bet if you decide to continue borrowing against your home. Consider ...
15
votes
Why are interest rates for home equity loans higher than for a mortgage?
home equity loans are typically a little higher than the rates for mortgages used for a home purchase. Why is this? Is the reason because a home equity loan is basically a second mortgage, so it is ...
- 57.2k
14
votes
Home equity price
Home equity is the value of the home minus what you owe on your mortgages.
In your case equity is
Equity = Value - Mortgage
Equity = $200,000 - $50,000
Equity = $150,000
Now if you are ...
- 144k
11
votes
How to split home equity fairly where contributions differed?
What is fair is hard to say without knowing all the details. If one person put in more cash but the other person did a lot more work on repairs and maintenance, presumably that "sweat equity" is worth ...
- 22.9k
11
votes
Is there financial instrument for overvalued homes
Yes - you could sell your house right now. This 'locks in' the current valuation, and removes your further participation in the risk associated with your local real estate market.
Step 2 depends on ...
- 42.9k
10
votes
Does home equity grow with the investment put into the house?
If I have a house that its market value went from $100k to $140k can I get HELOC $40K?
Maybe - the amount that you can borrow depends on the market value of the house, so if you already have $100k ...
- 140k
9
votes
The cost of living in a "High-Status Neighborhood"
I believe the advice against "living in a high status neighborhood" is less about the difference between a cheaper mortgage and more about the "high status" lifestyle and keeping ...
- 2,116
8
votes
Accepted
Can a first home's equity be used to bring down the interest rate on a second home mortgage?
Can you put this first home down as equity when getting a mortgage for your second?
(I think you mean "collateral", not "equity") Not with a traditional mortgage. The mortgage will be a lien on the ...
- 140k
8
votes
Accepted
Products for withdrawing from a home's equity?
Yes, the product you want is a fixed rate loan. As rates were dropping in the late '90s, I went from a "Mortgage" to a "Home Equity Loan." The latter had a fixed rate, 15 year term, and a crediting ...
7
votes
Pros and cons of these 2 methods of property financing
They are both equally bad. You are financing a risky (subject to gains and losses) investment with a risk-free (the loss in this case is constant) loan.
Is the 2nd method less risky given that the ...
- 140k
7
votes
Accepted
Can a jobless person get a home equity loan if he has other sources of income such as stock dividends?
As Ron’s comment implies, it’s a matter of the numbers.
My HELOC recently reached the end of its draw period, and I preferred to keep it active. I opened the conversation with the bank by saying I ...
7
votes
Purchasing a rental property: Should I get a 401k loan or a home equity loan?
To answer the 401(k) part:
I'm basically "borrowing from myself".
Yes, but the "interest" rate is rate at which your 401(k) grows, since you're missing out on the gain that the money would have ...
- 140k
7
votes
What happens to a second mortgage once a first mortgage is paid off?
"Second Mortgage" is not a legal definition - it just describes a mortgage or loan that is subordinate to another loan, meaning that in the case of foreclosure the other loan is satisfied first.
If ...
- 140k
6
votes
Does home equity grow with the investment put into the house?
In short, your scenario could work in theory, but is not realistic...
Generally speaking, you can borrow up to some percentage of the value of the property, usually 80-90% though it can vary based on ...
- 1,018
6
votes
Why are interest rates for home equity loans higher than for a mortgage?
To add onto Adrian's answer, a HEL could carry a lower interest rate than a mortgage. Putting a HEL in first position, with a short term will generally result in a rate that is lower than the ...
- 78.5k
6
votes
I have 100k in home equity. What is the best way to use this to create more money?
If you want to cash out your equity, then sell your home and buy another one that's $100k cheaper.
It is a mistake to think of home equity as an asset in terms of being able to generate income. There ...
- 140k
6
votes
Accepted
How does equity work if you use equity to for a down payment on a second house?
It looks like you're trying to "parlay" equity to buy multiple homes. It doesn't work like that.
All "equity" is is what the house is worth (what you can sell it for) minus what you owe. The only way ...
- 140k
6
votes
Can I get a home equity loan on a fixer?
Generally the only requirement for a house to be mortgageable is that it has value. (An exception might be if it's uninsurable for some reason, but that's pretty rare.) The other side of the coin for ...
- 47.3k
6
votes
Accepted
Better to withdraw from 401k or take out home equity loan for investment opportunity?
Let's look at it from a pros/cons perspective:
401(k) pros:
No required payback
Cons:
~50% tax and penalties on withdrawal.
Permanent loss of value if you don't replenish it.
Home Equity Loan Pros:...
- 140k
6
votes
Accepted
The cost of living in a "High-Status Neighborhood"
While a home can be an investment, it is also an expense. When you own your home, you are effectively landlord and tenant at the same time.
The investment return on a house consists of price ...
- 30.2k
5
votes
How to split home equity fairly where contributions differed?
In addition to D Stanley's answer, I would like to mention how to calculate how much each of you have contributed.
total_equity = market_value_of_house - remaining_mortgage_balance
your_contribution ...
- 6,849
5
votes
Accepted
Can home equity be used to pay your mortgage?
Here in the UK, "equity release" schemes are being widely advertised. Most of them are essentially a mortgage that you never make any payments on. Provided the equity in your home is large ...
- 10.7k
4
votes
I own the condo but not the (13 year old) mortgage. What should I do?
I would just seek out a new mortgage in your name. Whether you can get one at the same rate depends on your credit history, but with a LTV of less than 50% (30K/70K) there should be no problem getting ...
- 140k
4
votes
Purchasing a rental property: Should I get a 401k loan or a home equity loan?
Since you are mostly asking an opinion question I will give mine. Your best bet is to get out of this real estate deal ASAP. You do not have the money or the margin to make this work and it could ...
- 78.5k
4
votes
Does home equity grow with the investment put into the house?
Your best bet is to talk with a banker about your specific plans.
One of the causes of the housing crash was an 80/20 loan. There you would get a first for 80% of the value of a home and 20% on a ...
- 78.5k
4
votes
Pros and cons of these 2 methods of property financing
These are from from equal approaches. But in some ways they are equal.
2) Buy property with cash. Then, borrow up to 80% of property value using home equity loan.
...
Is the 2nd method less ...
- 144k
4
votes
Can I use home equity line of credit as second house down payment?
Can you ? Yes.... probably. It depends on the equity you have in the existing house and the down payment you need for the new house and your debt to income ratio and a few other things.
Should you ? ...
- 2,778
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