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The answer is not that simple- First and foremost, you must have quite of bit of equity to get a HELOC especially since you indicate, you have a current mortgage. Additionally, if you were to get a HELOC now, you may have difficulty refinancing later on due to the fact the new HELOC you attained will need to be subordinated- ((meaning- take 2nd position again.))I would suggest you refinance first and get a new first mortgage. You can then apply for your HELOC with no worries or time delays as you will not have to deal with subordinationsIn any case- In order to get a HELOC you will need to have at least 50% equity to get a 20% equity HELOC.
As Eric said you can only get a HELOC if you have sufficient Equity. If you are trying to pay down a first mortgage to get it under 80% so you can finance it without PMI it's quite possible you don't have enough equity to get the HELOC. If you have enough equity to get a HELOC now you have enough equity to just do a new first mortgage and new second mortgage. Your first mortgage can be at the loan amount that you need to get the favorable financing (your new first doesn't have to be for the full amount of your current first mortgage). Your new first and second mortgage do need to cover the payoff of your existing mortgage.Here's an example. Let's say the property is worth $200k your existing lien is $167k. You could do a new first mortgage for $160 (80% LTV) and a second for 10k to cover the remaining balance on the first mortgage and closing costs.The same applies if you are trying to staying under $417k for a conforming loan and your current mortgage is like $440. Assuming you have the equity you can do a first mortgage now for $417k and a second mortgage for the balance and closing costs.I don't see why you'd need to do a HELOC to pay down a first now and then do a new first mortgage later.Can you give us the balance on your present first mortgage and the estimated value of your home?
Many thanks; I agree with the comments, especially I had something in mind similar to what Thomas Hall mentioned. my current mortgage is about $467K (fixed) and the house fair market value is about $590K. we are determined that we are going to sell the house in less than 5 years, so the whole thought behind this is to get a HELOC, pay for the mortgage to drive it to a lower value so I can get at least a good rate ARM (agency arm requires no more than 75%) to minimize interest, if not possible to make it all the way to $417K. I am not sure though if any body does first mortgage & 2nd mortgage so I can avoid doing the HELOC?
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