Equity Loan on existing home... What do you think?

[surfit]

Hi all-

 

Quick question.

 

My good friend owns a home that has recently appraised at around $825,000. He has 1 mortgage and that's for $398,000. His income is roughly $42k per year. His credit is bad/fair, no bankruptcies or foreclosures, mainly charged off cards.

 

We're wondering, does anyone think he could qualify for a loan for $80,000 based on the equity in his home? We've yet to apply anywhere; first wanted to run this past the pros here. (I'm usually over in the credit forum).

 

Oh, and if so, with whom do you think he should apply?

 

THANKS!

[Brian B The Loan Professor]

Thats probably a little more than his income could qualify for on his own - Did he get the first loan using just his income

[surfit]

He's actually owned the home since 1959. He took out loans for his parents' medical expenses in the 1990s. He got those loans on his income in 95-97. He's owned his business since 1972.

[Brian B The Loan Professor]

That makes sense - with 42k a year income he would max out at around 1400-1500 a month in payments so it wouldnt be enough to finance the current mortg

 

 

 

He may be eligible for a reverse mortgage - it would be based on the equity in the home and actually pays out with no repayment

It is only available to homeowners over 62 - with sufficient equity

It may be an option

 

B

[surfit]

Forgive me for being naive, but would the lender of the reverse mortgage get his home as part of the deal?

[surfit]

I've done some research since my last comment LOL and ok, no, no one takes your home unless you don't pay your other responsibilities like taxes, etc.

 

However, he is wanting to pass his home on to a friend. I'm wondering if anyone knows what the chances are that his friend could refinance the house upon inheritance, instead of being forced to sell it?

 

Thanks for the advice everyone.

[Brian B The Loan Professor]

It would depend on the new homeowners income and credit

 

As far as the reverse mortgage it is almost lie you are selling your home to the bank and they are making payments - as they do their equity position would increase and the owners decreases

 

 

B