Expensive Money? - Posted by Charles
Posted by Charles on March 18, 2000 at 23:20:28:
What should it cost to get this loan (aside from “best deal you can make”)? Here is the situation.
Borrower has high equity in his homestead and wants to take cash out. His original note was sold and he does not like the way it is being serviced so he will be paying off the first and still have one loan + cash out. It is to be a no-doc loan (no income verification, appraisal). The loan amount, $65K, is based on the assesed value. The mortgage broker came back with 2 lenders willing to write the loan.
5 year balloon amortorized over 30 years, 4 points, 11.75%, and 6 months interest on 80% of the loan balance pre payment penalty if paid in the first 3 years.
30 year fixed rate @ 12.65% (no balloon), no points, no pre payment penalty.
Either of these would be ok for a short term investment type loan (aside from the pre payment) but is this the best he can do for this type of loan (no doc equity) on his homestead?
Any insight would be greatly apreciated. Thanks.