Can a mortgage on the house be payed off by home equity loan?

January 13, 2010 by · 8 Comments
Filed under: Blog 

Is it possible to pay off the mortgage with an home equity loan if the APR is less than what I am paying right now? I understand that if I refinance, there are closing costs and for home equity loan, there are none, am I correct? What are the advantages and disadvantages of doing that? Please advice.

Answering first part of your question – yes you can. This is just a matter of technicality. If have open equity line of credit you just request a check, you are depositing this check into your back account and the next step – you are sending your personal check to your lender. This is it. Your mortgage is paid off from that moment.
Second part of your question – does it make a financial prudence? Well, technically it is very much possible. Lets say you have $150 K 7% current mortgage and 12 years to go with this one. Your home equity line allows you to take $150K for 10 years under 5%.
So it make a lot of sense.

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Comments

8 Responses to “Can a mortgage on the house be payed off by home equity loan?”
  1. Common Sense says:

    PAID, and yes it can IF the equity lender allows this.
    References :

  2. David Z says:

    yes you can do that if your home equity line is large enough. home equity loans do not call for principal payments so you only have required interest payments. this will have to be refied when home equity matures. i wonder what rates will be like then?
    References :

  3. Anthony says:

    It depends on the rate you are paying now and how long you are keeping the house . The disadvantage is that home equity loans can go up to a point where you will be paying much more than you are paying now .
    References :
    Experience in borrowing and lending .

  4. Ernest says:

    It depends if your equity allows this. Try to seek for professional advice first before anything else so that you would completely understand.
    References :
    http://www.ReverseThatForeclosure.com

  5. Todd Lipps says:

    Banks do home equity loans with little or nominal fees ($250 or less). Generally speaking, banks will do a Home Equity Loan (HELOAN) up to 85% of your homes value.

    If your loan amount is over 120k and your credit score is above 720, you should be able to get a traditional mortgage 30 year mortgage without closing costs anywhere from 5.5% to 5.75%. The larger your mortgage is, the easier it is to do this.

    Your options/decision can be determined by speaking with a few different lenders who will need to know the following:
    Credit score
    Loan amount
    Value of home
    How long you plan to own the home

    The advantages of a HELOAN are:
    Potentially no appraisal needed
    Pay off any kind of debt- cashout without rate adjustments
    Quick transaction, less paperwork
    Low or no cost regardless of loan size

    Disadvantage of HELOAN:
    Higher rate than a traditional mortgage
    Amortization is usually maximum of 20 years- possibly making the payment higher than it is now.
    Escrows for taxes and insurance will have to be paid separately

    Advantage of a traditional mortgage with no closing costs (assuming you can get one):
    Lower rate than HELOAN (based on industry averages)
    30 year amortization

    Disadvantage of traditional mtg:
    Potential barriers- Loan too small, not enough equity, credit score score too low
    More paperwork
    Longer process over Equity Loan
    References :
    I do this for a living

  6. Mary J says:

    you can post question and find more answer at here wish123.com
    References :

  7. rember says:

    Yes it is if your donor allows you and it will give you more advantages like following,

    * They typically have a lower interest rate (or APR)
    * They are easier to qualify for if you have bad credit
    * Payments on a home equity loan may be tax deductible
    * Borrowers can get relatively large loans with this type of loan
    References :
    Judgment.

    http://home123.com/homeequity.html

  8. Luba says:

    Answering first part of your question – yes you can. This is just a matter of technicality. If have open equity line of credit you just request a check, you are depositing this check into your back account and the next step – you are sending your personal check to your lender. This is it. Your mortgage is paid off from that moment.
    Second part of your question – does it make a financial prudence? Well, technically it is very much possible. Lets say you have $150 K 7% current mortgage and 12 years to go with this one. Your home equity line allows you to take $150K for 10 years under 5%.
    So it make a lot of sense.
    References :
    http://www.24by7info.com/mortgagerefinancing

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