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pghquest..yeah. I was just giving a very simple example of how a HELOC can become unsecured as a previous poster said it was secured by the underlying property.
pghquest..yeah. I was just giving a very simple example of how a HELOC can become unsecured as a previous poster said it was secured by the underlying property.
I assumed that was what you were doing, but just making clear.
I continue to be amazed over the number of people that get up, walk away from their mortgage simply because the value of their homes have dropped...
Then they go and pay rent.. woo, hoo, thats so much better!!
There are still plenty of options for 2nd mortgages and with the Fed cuts, the rates are very attractive.
Yes as long as you have the underlying equity to secure it. But what happens if the value of your home drops to below what your 1st/2nd mortgage balances are ?
That's why banks are hesitant to do them..home values are STILL falling and they don't want to take a chance.
Yes as long as you have the underlying equity to secure it. But what happens if the value of your home drops to below what your 1st/2nd mortgage balances are ?
That's why banks are hesitant to do them..home values are STILL falling and they don't want to take a chance.
The lenders have reduced the maximum loan to values that they will offer, but the value used is based on today not the unkown of the future.
The lender I use most often has pulled back to a mzimum of 90% combined loan to value on a purchase and 85% on a refi. However, they are not hesitant to do them at all. Matter a fact they are almost begging for more deals.
If you live in a market that has been declared a declining market by federal lenders you are in a pickle. More appraisals are needed and many companies are cutting back on existing HELOC's. People with existing lines of credit are being notified that their credit amount has been decreased to a lower amount. The Washington Post awhlie ago did an article about how it was playing out in the DC metro area.
We actually got the letter from Countrywide yesterday. Doesn't really effect us because we used the line to start our business a year and a half ago and had no intention of continuing to use it. The letter stated that it was due to the drop in property values. But it did then have all these options - basically call and plead your case I guess.
We didn't borrow more than the value of the house and I know it hasn't dropped below that. But like I mentioned, we are just paying it off, not using it, so it didn't really matter.
There are still plenty of options for 2nd mortgages and with the Fed cuts, the rates are very attractive.
What do you consider an attractive rate for a second mortgage and what is the max CLTV for such rate?
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Times are a changing.
