Can i get a home equity loan with a second mortgage for down payment assistance grant

[amckee]

I have over 100k equity in my home and want to pull 20k.  But i have a second mortgage it what ever it's called. For the amount of 10.5k.   Can i still get a home equity loan ??

[DakotaM]

All the banks/credit unions I know of want to be first or second position for home equity loans & HELOCs.  I haven't heard of any that will do it for a third position.  I'm sure they exist but probably not with great terms.  Alternatively, if you have that much equity, you should be able to get a loan for $30.5k.  That way the original second mortgage will be paid off and whoever you go with for the new loan will be in second position like they want.  

[ShanetheMortgageMan]

I echo what @DakotaM said, the most common solution would be just be getting a home equity loan that would pay off the existing down payment assistance lien + give you an extra $20k.

What is the interest rate on the down payment assistance loan?

With decent credit scores (680+) you could be able to get a 2nd mortgage up to 80-90% of your home's value at most places.

[amckee]

Not sure.   It's more of a grant ??    Never was told of interest rate 

and my mortgage company app didn't show anything about it 

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@ShanetheMortgageMan wrote:

I echo what @DakotaM said, the most common solution would be just be getting a home equity loan that would pay off the existing down payment assistance lien + give you an extra $20k.

What is the interest rate on the down payment assistance loan?

With decent credit scores (680+) you could be able to get a 2nd mortgage up to 80-90% of your home's value at most places.

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[ShanetheMortgageMan]

It could be a 0% interest grant.  What is the name of the down payment assistance program you used?

There aren't a lot of 3rd position mortgage programs, usually traditional lenders stay away from those.  I've helped people get 3rd mortgages with private money lending but those are only short term solutions (balloon payments in 2 years) and they must be for a business purpose (vs. personal use).

If it is a 0% grant, that may or may not be forgivable, then in that situation you have to determine if getting equity out of your home is worth giving up the benefits the grant gave you.

[fm92555]

STOP!

First get a copy of your loan note from Loancare Servicing. Then you will know the terms of your loan. This could be a loan with a baloon payment (meaning the remaining balance is paid at the end of the loan term). But you need to know, maybe it was special financing, you won't know until you get the loan docs. But they have to give you a copy of the terms of your loan.

You don't want a 3rd mortgage if you can avoid it because they are more expensive and you will have three payments and that is not a good thing. While there are some 3rd position lenders out there, a lender would most likely want to pay off the existing 2nd and give you some cash out in order to take that second position.

How much more you can get depends on the lender, your income and credit, and the current market for homes in your area. Most of the country is in a tight housing market so things are in your favor as far as the value of homes, but the rest will be determined by your credit and income.

Yes, some lenders will lend up 110% or even 120% of market value, but I would stay away from all of those. Even though you have 100k in equity you need to know what percentage equity you have.

100k owed on a 200k home (100,000/200,000 is 50%) is better for a bank than 900k owed on a 1 million dollar home (900,000/1,000,000 is 90%).

You can get an idea by going to zillow and looking for similar homes that just sold in your area that are the same size by square footage and number of bedrooms as your home. Just take the average sales price of 3 or 4. Then add up the total of all the loans on your home. Divide the amount you owe by the amount of the average sales price and you will have an indication of your house LTV (loan to value). The smaller the number the better off you are (.5 is great, .9 is less great).