If we refinance how much money can we pull out of equity?

Me and my wife bought a home about 6 months ago. Our mortgage is for $130,000 and the home is appraised for $150,000. We need around $20,000 to consolidate bills and fix up the house. Can someone explain how this would work out for us and if we would be able to get the full 20k and in what form we'd receive the money. Thanks.

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  • Pengy
    Lv 7
    1 decade ago
    Favorite Answer

    If your home was appraised at 150K and purchased for 130K it is now worth 130K unless you are in a declining market in which case it is worth less. If it recently was appraised at 150K and you owe 130K you only have around 13% equity, again hard and near impossible to get 100% financing due to the declining market. Have a new appraisal done and see where you really stand, then talk with a bank, or mortgage processor.

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  • 1 decade ago

    It is a really bad time to be thinking about a home equity loan, assuming you could even get one from a reputable loan company. House values are still dropping like lead weights, and any equity you have in your home should be protected. Many people have found out that they actually owe more than their houses are worth, due to falling house values, and that's not a position anyone wants to be in. If that happens the bank is going to want its money immediately.

    I would seriously advise waiting until the housing market stabilizes, however long that takes. You might find that your $20,000 equity in the house disappears or becomes a much smaller amount in short order.

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  • Dale H
    Lv 4
    1 decade ago

    You will be hard pressed to pull out the 20K as you just bought the home. Most lenders want you to own the home for 12 months before you can take cash out based on a value greater than the purchase price.

    Even if you could get 100% cash out with a new first mortgage the terms would stink out loud.

    You might want to check with your 1st mortgage lender to see if they could offer you an equity line of credit based on the appraised value or check with some local savings banks about a HELOC or 2nd mortgage.

    Those options might be your best bet, but you will probably still not be able to access the full 20K in "equity".

    Good luck with your plans.

    Source(s): 7 years mortgage lending experience.
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  • angela
    Lv 6
    1 decade ago

    I doubt that you will be able to get anything out of your house. Most lenders will only lend 80 - 90% of the value of the house. At $150,000 you are looking at $120,000 - 135,000. Since you already owe 130,000 you wouldn't be doing yourself any favors to try to get that extra 5,000. I'm sure there are some lenders that will go higher than 90% and if you are desperate you could find one but realize that the value of your house might come down if things don't turn around financially for our country and then you would owe more than your house is worth. Also, in order to refinance or get a home equity loan, you will have to have another appraisal and pay closing costs again.

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  • 1 decade ago

    What yo need is a home equity loan. You are not likely going to get it. You don't have enough equity. You would be borrowing 100% of the value of your home and banks and mortgage companies are not so hot about doing that any more.

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  • Anonymous
    1 decade ago

    Usually you can only get 80% of the Equity But you never know your bank will send someone out to appraise the house again the value might go up or down.

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