I am inheriting a 149k fixed loan from a family member that will become variable at the end of this year. My goal is to keep the payments as low as possible and im worried it will be over 1k a month with variable payments in early 2018. I dont know anything about loans so how can i get it down to about $400-$500 a month?
Any help is really appreciated.
Fri Apr 14, 2017 8:54 pm
Sdubz Full Member
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its an equity loc too.
Fri Apr 14, 2017 9:07 pm
oldguy Senior Member
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quote: I dont know anything about loans so how can i get it down to about $400-$500 a month?
You can't get it that low. EG, if you you got a 30 year, 2.5%, fixed rate loan, the payment would be $589/m. No one will lend money at 2.5% FR - and no one will lend money beyond 30 yrs.
If you convert the $149,000 to a 30 year fixed rate mortgage at 4%, the payment will be $711/m, that's probably about the best that you can hope for.
Fri Apr 14, 2017 11:51 pm
christcorp Preferred Member
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I'm curious about the term inherited a loan. Are you saying that you inherited a home that has a mortgage on it? Loans are strictly money. People get confused. There's no such thing as a home loan or a car loan. You simply borrowed money, and you're using something like a house or car as collateral. I've known people that had other assets they used as collateral to borrow money for a different purpose. Even the common person has used their existing home as collateral to borrow money to start a business or a vacation or whatever.
But assuming you inherited a home, that had a mortgage against it, laws in most states don't allow a creditor to simply "call the loan" and assume the home in repossession. They have to allow the person who has inherited the item used as collateral, in this case the home, to negotiate payback.
Trust me, just about every lender wants the money. They don't want the house. They will work out new terms. You should be able to refinance with this or another lender and not have a variable rate loan. Variable rate loans suck. The only people who I've seen use them, are people who think they can flip the house or whatever they borrowed the money for, and pay it off sooner. Other than that, variable rate loans are stupid.
But assuming the loan you are speaking of has a house against it as collateral, there's only 3 possibilities for loan vs collateral value. 1) the house and the loan are about the same value. 2) the house is worth less than the loan. Sometimes this happens when a real estate market turns upside down. In these two situations, the lender does not want the house. They want the money. And they will let you refinance. You can get rid of the variable loan. The third case is if the house is worth a lot more than the loan. In this case, because of when thevariable part of the loan starts, it may be that the previous owner took a home improvement or other loan using the equity as collateral. In this case, the lender might want the property. But that still frees you up to go to another lender and get a fixed loan to pay off the variable loan.
But as old guy said, there's no way to get a loan of that much down to a $500 monthly payment. Not unless you can lower the loan amount. E.g. You have $50k in other cash, inheritance, etc. and you put it towards the loan and only refinance $100k. Assuming we are talking about inheriting a house, that happens to be used as collateral for a $149k loan, the first thing to do is determine the value of the house. If the house is only worth the value of the loan, let the lender have the house. The lender is entitled to repayment from the estate. If however, the house is worth considerably more than the loan, refinance the loan, then look into selling the house, paying off the loan, and keeping the equity. If you want to keep the house, then decide whether to move in or rent it.
Bottom line. You can't inherit a loan. It's not possible. You can only inherit something that may have been used as collateral fora loan, and thus has a Lien against it.