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Cash out or equity loan

LenaK 2004

Thank you in advance for the answer. We accumulated some debts on credit cards. Recently my husband lost his job, and we were told by some of our friends that it may be hard to get an equity line. Would it be easier to refinance the mortgage and take more than the loan amount? - Lena

RomanS 2004

Actually, refinancing when income is tight may be harder than obtaining a 2nd mortgage loan in some cases. Often, debt-to-income ratios are allowed to be higher for 2nd mortgages than for cash-out refinances. Each case is different of course. There is no harm in trying both ways, and seeing what's better and more effective. Decisions these days are automated, and can be received quickly. Max debt-to-income allowed on 2nd mortgages is typically 55%, and varies for refinances depending on other details (assets including). It is faster to get a 2nd loan or line, all things being equal, and cash-out refinance may cost you in rate, if total loan-to-value ratio becomes high enough.

Roman Shulman,

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