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Author: Dwdonhoff Big gold star, 5000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 127815  
Subject: Re: 100% Equity, Can I Borrow? Date: 12/30/2001 9:11 PM
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Hi Bud,

Are there institutions which make this kind of loan?, i.e. not a home equity loan with its higher interest rates, but a conventional mortgage or loan with a like rate?

Sure... not a problem. You can take a mortgage on your free & clear home just as though you were buying it the first time. The fact that you only want 50% of the value will make it a very smooth sailing.

The ONLY "hitch" would be a likely slight increase to the rate-fee of about 1/8 to 1/4 of a percentage point. Not a big deal, really.

30 year fixed rates are advertised everywhere, and are nothing too special, really. 5/1 ARMs and 3/1 ARMs are especially at a discount to the 30 year fixed right now.

Depending on your time-frame thoughts, you still might want to consider a Home Equity Line Of Credit (HELOC,) which are currently available at the Fed Prime Rate (currently 4.75%) for the life of the loan (which could be as long as 25 years, or longer if desired (as many lenders are offering discretionary extensions for favorable (timely paying) clients.) This loan is tied to the Prime... so if/when the Fed adjusts Prime again, the loan's rate will shift with it.

Thus... if your crystal ball says the economy is such that the Fed is unlikley to raise rates much or very rapidly in the foreseeable period of time, this could be a great way to take a huge advantage of really low interest rates.

Cheers,
Dave Donhoff
Mortgage Fool
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