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Refinancing a Heloc

Discussion in 'Home Equity Loan' started by electricjeff, Jan 14, 2014.

  1. electricjeff

    electricjeff LoanSafe Member

    So I have a Chase mortgage with a 135k balance and a Chase Heloc with a 140k balance. My condo is worth about 280k at the moment. So my question is this. My payments are set to balloon in 2015. I will not be able to afford. Am I able to refinance the Heloc? If so would I have to refinance to a Home equity loan with fixed payments? Is the new Dodd Frank law going to affect my ability to do so if refinance is an option? Thanks
  2. electricjeff

    electricjeff LoanSafe Member

    So I'm looking at my paperwork and actually my balloon payments begin in 2017. Not 2015. So I will be ok for a while. My rate that I got on my paperwork says 7.5%. I am trying to figure out what my balloon payment would be. I have 20 years of balloon payment. I'm not sure if I have 7.5 fixed or is it usually prime plus 1 percent for standard helocs? So much paperwork here to read through.
  3. Erik Sandstrom

    Erik Sandstrom Mortgage Expert - Call 1-800-779-4547

    Hi Electricjeff,
    Thanks for reaching out to us and I would be happy to answer any questions you may have.

    When you have a 2nd mortgage and trying to refinance both the 1st and the second (which is what you would normally do) it's considered a cash out refinance and there's requirements behind that. We would only be able to go up to 85% LTV and 95% CLTV. (Right now you're at 98.2% CLTV) meaning we wouldn't be able to pay off the 2nd entirely, leaving a balance behind. That would require you to bring the loans down to 266K which would be at least 9,000.00 needed to come to closing. That would not however cure the problem with the 2nd and would leave a balance remaining of 50,000.00. I do have another avenue below:

    Financing to 90% which would require 13,000.00

    We would do the first mortgage up to 80% to avoid mortgage insurance and then our sister company would finance the other 10%.

    As far as the balloon payment, it would depend on the terms of your current loan. If the HELOC is interest only right now (which most are) you're only paying the interest for a period of time. Then it would amortize once the period elapses (if there is a time period) of the interest only period for the remainder of the term or over 30 years. If there's a balance remaining that would be the payoff. If you have a balance now of 135,000.00 it definitely sounds like there would be a balance owing at the balloon.

    I would look into doing something now before interest rates increase if you have funds available to put towards the mortgage and make the refinance possible. I would be more than happy to help you look at different options.

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