Lou asked:
We’re trying to get a first mortgage for the equity we have in our home. My husband built our home so we’ve never had a mortgage. We want to use the money for some financial security but this is not the answer the bank wants. What do they want???
We’re trying to get a first mortgage for the equity we have in our home. My husband built our home so we’ve never had a mortgage. We want to use the money for some financial security but this is not the answer the bank wants. What do they want???
Tags: Equity Loan, Financial Security, First Mortgage, Money
what are you talking about!
Going in to debt is not financial security but an obligation that you must work to support.
You might want to get a home owners line of credit.
tell them you need it for home improvements
They likely want to hear that you are planning to build an addition, a rec room, a garage, some other type of addition to the house. Or they would like to see that you are planning on using the money to go back to school, or send the kids to school. These days money is tighter than ever and many institutions are cracking down on lending, and even cutting back people’s credit limits.
Bottom line is they want to see something that you will be doing with the money other than just taking a mortgage and leaving the country.
They want you to REINVEST the money back into the house. Taking out a loan and parking the money is not a very sound thing to do financially.
How is borrowing money going to bring you financial security?
You built the home and there is no debt on the home? Good for you!
You have your financial security already.
If you borrow against your equity at 5% then you have to invest that money in something that earns more than 5% of your are losing not making money.
You have it backwards, going into debt and paying interest will not give you any security at all.
You are in a secure position now, don’t mess it up.
The best answer is that you will use it for home improvements. That will make the bank feel like you are investing back into a property that perhaps they may own someday if you default. Bankers live in box called risk analysis, that is what every loan is based on.
I used it for major addition. You use your home to protect your home not as a piggy bank. Instead of paying a bank interest just take that 500 or 1000 mortgage payment and sock it into an IRA
They want to hear that you are getting the loan to make improvements if for a fixed interest home equity loan. Otherwise you could say that this is part of your financial planning strategy as interest rates are the lowest that they have been for years and you would like to diversify and not keep all your money in untapped house equity.
Are you getting a first mortgage or a home equity line of credit (HELOC) or straight home equity? HELOC’s rates are variable and the others are not unless you lose it and get an ARM….don’t.
Rates on 15 year loans are less than 4.5% fixed right now.
Tell them you are building a brothel in the backyard for extra income